The Goods and Services Tax (GST) Council has opted for incremental reform, lowering rates of 23 goods and services, including seven items, in the 28% slab. The tax rate has been reduced on cinema tickets, televisions, digital cameras, computer monitors up to a certain size and frozen vegetables. The rate cut must be faster, especially in the 28% slab that is high in general and glaring for important intermediate products like cement and auto parts. The case to lower GST on air-conditioners is compelling too. The peak rate will remain on 28 items. But the highest slab must be earmarked only for ‘sin goods’. Rate reduction and a simpler tax structure will benefit consumers and make compliance easier.
Revenue implications prevented the council from cutting GST on cement, for example, but a steep GST rate will jack-up construction costs. The blip in revenues would be temporary at best, given that rate cuts foster compliance and will boost revenues in the medium term. The council also skirted the issue of expanding the tax base to cover sectors such as petroleum and electricity to cut out the cascade of taxes and enhance transparency within the sectors that use them as inputs. That’s unfortunate. The real estate sector in its entirety must also be quickly brought under GST.
The council’s attempt to create a single authority for disbursement of refunds by either the central or state tax authorities is welcome. Refunds must be swift, to boost exports. A new return filing, to be introduced from April 1 next year, should be simple, non-obtrusive and an administratively efficient way to match returns and invoices. A centralised authority for advanced rulings will remove conflict between rulings by different state authorities. But the GST Council has a lot more work to do to make the tax system stable.
Source : https://economictimes.indiatimes.com/blogs/et-editorials/welcome-changes-to-gst-yet-more-needed/