Much has been
said about One Nation, One Tax; which was launched with much fanfare as is the
case with our marketing savvy PM on 1 July, 2017. Though GST functions through
a complex structure for it was in making for more than a decade. Not to
mention, the speed with which Govt. implemented GST, without proper rules,
guidance or education about the system, without bringing proper awareness about
how to comply with the law.
GST till date
has witnessed so many modifications (read Notifications). GST for its structure
and size, can be termed Constitution of Indirect Tax. Yet it has surpassed the
modifications of Constitution perhaps in 70 years than in 70 months; in fact
GST is yet to live half its life of 70 months.
We remember,
Late Arun Jaitley beaming to the reporters that we are reducing GST rates on
different items as the GST collection numbers have been good. Wasn’t that the
reason why GST was introduced that there will be revision or confusion of
rates? Now the role reversal is happening, read the above news item.
We are not
talking about 180 degree turn the GST has taken for some industries. Why
couldn’t Govt. take help of more experts, or perhaps taken more time to understand,
how people can bypass the provisions of GST to evade taxes and built a better
system to begin with. I mean, Modi had been given clean sheet to work on
building a new system as against his Govt. complains that they are still
cleaning the mess of 70 years of Congress. Here they got a chance to build a
system from scratch and they incorporated all the blunders of Congress of 70
years as their legacy in GST network.
The Govt.
official mentions, Govt. is robbed of its revenue. I means, who is robbing whom?
Can a Govt. be robbed by its people, the same people who elected the Govt.,
gave them the power to make laws and rules for them. The word “ROBBED” by Govt.
official, signifies the problem that exists in the fundamentals of GST from the
time, it was put into practice or perhaps into
planning. Mind you Sir, Govt. is robbing people always, globally in
every democracy and irrespective of the colour of the political party.
None of the
businesses put into 18% and 28% tax slab of GST, earn as much as money for
themselves as the money, they are collecting as taxes from the Govt. It applies
in the case of businesses in 5% category as well. Two and a half years, petrol
and diesel are still not part of the GST and I guess there is no plan. Taxes on
petrol and diesel is the only reason, perhaps why we are able to clock 4.6%
GDP, otherwise it may be zero. Not to mention, the State exchequers are in
bigger mess and petrol/diesel taxes is the only way, a lot of States are
surviving, otherwise they may file bankruptcy.
The issues for
which States and Central Govt. are wrangling in GST is another matter, about
which the common man is not even aware of. Refunds to exporters is known in
India, a lot of exporters have closed shop due to delays from the Central Govt.
to get refund on their taxes. Exporters are eligible for 100% credit of GST on
proper documentation after confirmation of legitimate exports.
At the time of
implementation in 2017, Malaysia had rolled back GST completely out of the
system and the question arose, why is India implementing it? India as a country
for its size, needs GST. I mean, for Govt.’s defence, Govt. has been quick and
always up on its feet to make the changes in the GST. But the changes are so so
frequent, at times changes are complete landscape shift from what was planned
with the law. 180 degree rotations signifies that the Govt. is not even clear
about the objective and the loop holes, which exist ensure, it can never be
complied, it will never be complied; neither by people, nor by Govt. How many
training sessions, Govt. has to undertake to teach their own officers.
Will rollback of
GST take place? I for myself believe certainly, there are no two ways about it.
When is the question? While introducing the GST and the blunderous
implementation, Govt. had given the expiry date of GST. At the time of
implementation, Central Govt. had declared that they will be compensating the
States for their loss in revenue for first 5 years.
Now Modiji in
his second term as PM has immediately extended the compensation to States from
5 to 8 years, from 2022 to 2025. 2025 is the year, when GST will be rollbacked
as the States are already fed up with the delay of compensation from the
Central Govt. Moreover 29 States in India, 2900 flip-flops in 29 months of GST
rules and compliance. States would want to go to the system, in which they are
good at milking the particular industries, the State is able to house.
The decision to
push the compensation date to 2025, is to clearly avoid the 2024 election by
which Mr Modi will claim his legacy of 10 years as PM as the finest PM of
India, at least in his eyes and GST will still be the hallmark for 2024
elections fight. Though most likely, 2024 elections will be for paving the way
for Amit Bhai Shah to become next Prime Minister. Of course, it’s a long shot,
depending on the optics of 2024 and results of data set at which BJP as party
masters the art to analyze such data for elections.
I wonder
sometimes, had BJP as political party could gauge its decisions and the form of
its implementation like they are able to gauge wind of elections and ensure
that the wind blows in their direction is in itself a phenomena, we would have
already been 10 steps ahead of PM’s speeches. Rollback of GST would tell us,
Modiji was always putting the cart before the horse and by the end of it, much
hope of building of New India will be lost.
Though it is
still good 5 years before GST rollback, much drama will be played in the
downturn on the back of GST. Let’s hope in the meantime, the Govt. ensures laws
are made better and implemented better for the hope, that they are squandering
away.
