‘Gross Miscalculation Of The Value Of GST’

The Goods and Services Tax (GST) is an important piece of reform as far as the indirect taxation system of India is concerned. It will also contribute to making India one common market. That will help in its own way.

But I don’t accept the theory that GST is a panacea for all our economic ills. And, that overnight India’s growth rate will go up by 200 basis points. This is a pathetic misunderstanding of the value of GST.

We should no doubt pursue it, adopt it, implement it, but there should be a clear understanding that it’s only a reform of the taxation system relating to indirect taxes between the Centre and the states. Nothing more, nothing less.

We (the Standing Committee on Finance headed by him) submitted our report on GST in Parliament in 2013. I learn that the IT platform for tackling the enormous problems which will arise administratively about setoffs is not yet in place. A GST regime cannot take off without such a platform. Every transaction will have to be captured. The IT platform would have to be foolproof. I can tell you from experience that it has taken the government many years to put in place a system for CENVAT.

Some people are already dismayed by the fact that the states will lose the right to levy taxes. So will the Centre. So how will the system work? But overall, it’s a welcome step.

There are challenges of implementation. Every state will have to pass its own laws. First, the Constitution amendment Bill will have to be passed by Parliament. Then it will have to be referred to the state legislatures. At least 50 per cent or more of the state legislatures will have to adopt it before it can go the President for approval. Only after Presidential approval the Constitution will stand amended.

Then each state legislature will have to pass laws relating to the GST. Further, the states and the government of India will have to make the rules to notify the law. All this will involve close coordination of the state legislatures, Centre and administrations.

Assuming it is passed in the winter session, it will then have to go to the state legislatures. They will have to convene special sessions. That may take at least a couple of months. Then the rules will have to be framed, and all the administrativearrangements for GST rollout will have to be made. It will not be easy to make such administrative arrangements in such a short time. I don’t know how much preparatory work has already been done.

Source: http://businessworld.in/article/-Gross-Miscalculation-Of-The-Value-Of-GST-/08-07-2016-100194/

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