On first anniversary, PM all praise for GST, the most complicated tax

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On July 1, the Goods and Services Tax completed one year and the Prime Minister Narendra Modi was all praise for the greatest reform of the tax regime. The Congress said the GST was riddled with multiple flaws, cumbersome procedure for traders and businessmen and extra burden on consumers. Former Finance Minister P Chidambaram said, “World over, GST is one rate. You can’t say, I am introducing GST but will have multiple rates, call it by some other name, call it the RSS tax.” The Minister of Industry in Tamil Nadu assembly said due to flawed design and hasty implementation of the GST 50000 small and medium enterprises were closed in 2017-18. The Prime Minister said the reform merged 17 taxes and 23 cesses into one single tax. About one single rate he said it was not possible to have the same tax rate for milk and a mercedez car. Taking credit for launching the new reform, he enumerated the benefits that have been brought about by the measure. Piyush Goyal who is discharging the duties of the Finance Minister in the absence of Arun Jaitley said the GST collection would cross Rs 13 lakh crore in the current fiscal year.

The tax was first proposed during the UPA regime, but it was the BJP that opposed it. Now the party is taking all credit for it. It was implemented in a haphazard manner and the GST council had to revise the rates a number of times. Tax reforms should be hailed by one and all but the government adopted a hasty way and it had to go for revision of rates for time to time. This way the traders and consumers were both confused. Common people and traders also have never been happy with the new tax regime. People feel they are under a new burden of tax. Chidambaram said even suggestions by the economic advisers were ignored. He said multiple rates could be reduced to the single rate with the exemption of merit goods and services. Businessmen are also grumbling that the authorities have been given extraordinary powers and the procedure is the most complicated. The establishment of a huge number of new units is not the proof that they were attracted by the GST.

A group of finance ministers was set up to rationalize the rates and simplify the procedure but the tax is irksome on both the counts. Small businessmen can send their returns quarterly but others have to submit monthly returns. Even a single  Rs one lakh inter-state transaction in one financial year will force the company to send monthly returns. Other conditions were also imposed on inter-state transactions.  If a registered firm procures supplies from an unregistered company, it has to pay GST for the latter and then afterwards get refund.  Thus the big firms are putting burden on their small suppliers to get themselves registered for the GST. There are many other operational complications that need changes. There should not be anything irritating for small units which form a large chunk of the commercial network. The system has to be simple and reasonable for the people as well as for the traders.

The most consumed products petrol and diesel have not been brought under the GST net. The government said it was seriously considering the matter and a decision will be taken soon. Otherwise it is bound to adversely affect the BJP in coming elections.

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