GST has flaws; redesign, revisit it in its entirety, says Manpreet Badal

Bengaluru, August 29

Punjab Finance Minister Manpreet Singh Badal on Thursday said there were flaws in the Goods and Services Tax and called for GST 2.0 by redesigning and revisiting it in its entirety.

“GST has been a disappointment, and I think there has been some flaw in the design,” the Minister in the Congress government headed by Capt Amarinder Singh told PTI here.

He said expectation was that once GST was introduced, GDP would go up by two percentage points, tax collections would increase, exports would become competitive and filing would be very easy.

But the experience had been that the GDP growth had “not taken place” to the expected level and filing is “very, very difficult”, said Badal, here to attend the 8th ‘Invest North’ summit, organised by the Confederation of Indian Industry.

He said there were certain flaws in the GST and wondered whether a “bad design” could be corrected.

“So, what we are talking about is GST 2.0 because in the last two-and-a-half years, there have been almost 4,000 statutory amendments in the law. So, if you operate a patient 4,000 times, he is not likely to get well,” Badal said.

“So, I think we need to redesign our GST and if I am not mistaken, the tax collections in the last two years are actually lower than what India was collecting two years back,” he said.

If Indian economy is growing at 6-7 per cent, the tax collection should also be growing at least by four per cent, if not six, according to him.

“But how come that the tax collection has dropped in the last two years? So, GST has been actually a disappointment and my own feeling is that we have not been able to keep an ear to the ground,” the Punjab Finance Minister said.

He claimed that stakeholder consultation is not taking place, and there is a certain amount of arrogance in the central government, which is not willing to concede there are flaws in the GST.

“Go in for knee-jerk amendments like...if there are elections in Gujarat...bring it (GST rates on certain items) down...this is not how countries operate. So, my own feeling is that we have to do a GST 2.0.”

Badal said it did not make a difference which political party one belonged to, but the objective should be to make India a superpower.

“How do we achieve that? We can only achieve that if we have a system of taxation which is fantastic, first-class. India was not the first country to introduce GST. We are the 161st nation,” he said.

“Let’s redraw it in its entirety because you if start making changes in terms of tax rates and so on, it’s not going to cut it. Let’s revisit it again, the whole thing...,” Badal added. PTI