One nation, one tax

THE GST has been limping ever since its premature and hasty birth four months ago. Some kind of surgery was performed in Guwahati; even this exercise to make the GST regime people-friendly will not do because what is needed is a complete revamp and not just patchwork. This time, the GST Council, under the leadership of FM Jaitley, has shifted high visibility items of common use such as chocolates, shaving creams, shampoos, beauty products, granite and marble slabs to lower slabs. The prices of some other items of urban consumption will apparently drop marginally due to the latest adjustments and should be of political use as we enter an electoral timeline.

These concessions are estimated to make a dent of Rs 20,000 crore annually in GST collections. Presumably, the Centre will meet the shortfall either through borrowings or by levying duties on products outside the GST net. Ultimately, the burden of the revenue shortfall will also be borne by the same consumer. But the latest rate adjustments will not satisfy the consumer, especially the business community. Thus, even this retooling may not provide an ideal solution. The decision makers are fated to tweak rates and rules even in the future to make it more acceptable.

A “good and simple” tax regime will remain elusive unless the central leadership — PM Modi and FM Jaitley — accepts the fact that the GST is as complex as the previous VAT regime. The people have not taken to the GST because the outcome has been quite contrary to the promises. The country wanted a simple taxation system with one or two rate slabs, freedom from the complex maze of exemptions, minimal paper work and elimination of the inspector raj. But, to their dismay, they have found the GST full of the same ills that pockmarked the previous regime. Having killed the spirit of the GST because of haste in rolling it out well before the 2019 general election, it is imperative on the incumbents to acknowledge the blunders and revisit the entire blueprint.