The Finance Minister Mr. P. Chidambaram in his Budget speech in 2006 gave a very clear picture about the future of the Goods and service tax. Let us see how confident our law makers were in 2006 which is evident from the budget speech of the Finance Minister Mr. P. Chidambaram:-
“It is my sense that there is a large consensus that the country should move towards a National Level Goods and Service Tax (GST) that should be shared between the Centre and the states. I propose that we set April 1, 2010 as the date of introducing GST. World over, Goods and Services attract the same rate of Tax. This is the foundation of GST. People must get used to the idea of a GST.
This statement was related to the single point GST system in which tax would be collected by the centre and it will be shares between the states and centre. This statement proved to be a distant dream. The states at the initial stage rejected this system without much discussion because it was impossible for them to shed their right to collect the tax.
Meanwhile a certain portion of industry (not the traders) were eagerly waiting and supporting the GST even without understanding the fact that the law makers since 2006 are only playing with their sentiments without having any concrete possibility of introducing the single GST.
As a face saving activity both states and centre agreed on a compromising formula in which both states and centre will collect the Goods and service tax and without getting and support from the trade and Industry this “Dual GST” was introduced. This is not the standard format of the “Goods and service tax” but the states and centre through constitutional amendment can seek the power to introduce this dual GST.
Unfortunately this nexus of centre and states, which was clearly a distorted format of the GST, ran into the bad weather and again there were so many differences between states and centre regarding their own formula and it is postponed from the year to year or we can say from shri P. Chidambaram to shri Pranab Mukharjee and again from Shri Pranab Mukharjee to shri P.Chidambaram as finance Ministers in rotation or from Aseemdas Gupta to Sushil Modi as chairman of Empowered committee of state Finance Ministers on GST. Practically there was no specific direction was there and perhaps all of them practically know that they have produced a “round square” and they are buying the time to finally dispose it . All of them have set so high estimates and drawn a very rosy picture of GST hence it will be very difficult for them to take the blame of it’s non starter or failure?
Now First time the learned economist and our prime minister Mr. Manmohan singh came into the picture and see what he has said about GST :-
India is committed to taking “hard and difficult” decisions in the long-term interest of the economy, Prime Minister Manmohan Singh said on Tuesday, while assuring Japanese industry that the long-awaited Goods and Services Tax (GST) regime facing hurdles from states will be in place in an “appropriate type” by 2014.
India is a federation and there are difficulties to bring states to agree to surrender tax power but I am confident we will overcome the hurdle. We will work and we have been working to persuade more and more states to fall in line but it does require amendment of the Constitution and needs much more energetic efforts than an ordinary piece of legislation,” Dr. Singh said.
The GST has been facing opposition from several non-congress States which have accused the Centre of trying to encroach on powers of the states and that such a move would hit their finances.
“So, I cannot say we can deliver tomorrow but if you ask me by 2014 once elections are out of the way, whichever government is there will be a general agreement of appropriate type in place to help propel India’s growth story,” he said.
So now the game is perfect, one person is giving the baton to another……….. so that finally they will found someone who has the courage to declare that GST is impossible to introduce in present political scenario of the country.
See the reaction of Mr. Sushil Modi the chairman of the Empowered committee of state Finance Ministers on GST:-
“GST is an important tax reform and I am confident it will come into being in 2014 irrespective of whether UPA or NDA forms government at the centre after general elections,” Modi, who is the Deputy Chief Minister and the Finance minister of Bihar, told PTI reacting to Singh’s observations on GST in Japan and further blamed the UPA Government for delay in introduction in GST.
See the clear contradiction in statements of the both and you can yourself imagine what is going on!!!!!
CA Sudhir Halakhandi – CA Abhas Halakhandi
“Halakhandi”, Laxmi Market, Beawar-305901(RAJ)
Cell- 9828067256, E-Mail – sudhir@halakhandi.Com