One market, one rate — much like the European common market — was how the Goods and Services Tax was envisaged. Considered the most radical tax reform since 1991-92, when the era of economic liberalisation set in, it involves a revolutionary change and promises transparency and less corruption. It was an ambitious and near-impossible dream, given India’s huge size and multi-layered society. So the fact that there are four tax slabs instead of one common rate has created scepticism in some circles on the promise of one rate, one market. The gap, for instance, between the rich and the poor is so enormous in India that, ironically, it would be iniquitous and undemocratic to have one rate. There is also a need for clarification on where the tax will be imposed.
If it is to be on the supplier, then if there are multiple sources of supply, will they be taxed at all sources? It may be noted that Union finance minister Arun Jaitley has pledged that there won’t be any need for multiple registrations. He has also assuaged fears over the arrest powers given to GST inspection officials. The fears of corruption and arm-twisting are not entirely unwarranted, as taxpayers have been terrorised earlier by sales tax and other authorities. Neither the government nor the GST Council can be blamed for how the ultimate GST, with different tax slabs, turned out. Given this backdrop, it is puzzling why it was decided to bring bidi, the poor man’s smoke, under GST for health reasons. If this was the reasoning, why was pharmaceuticals included in the demerit list? It involves people’s health and is in the interests of affordable healthcare, which is high on this government’s agenda. There appear to be a few contradictions here, and since Prime Minister Narendra Modi will have the final word on contentious issues, one hopes he will look into all valid grievances. Mr Jaitley had reportedly sought industry feedback, but obviously seems to have overlooked these, or didn’t think them worth discussing.
