July , 2017
GST: Main weakness lies in its hasty implementation
14:47 pm

B.E. Bureau

The Manmohan Singh government was very keen to implement the Goods and Service Tax (GST). Pranab Mukherjee while he had been the union finance minister mentioned it in his budget speech in 2011. The main purpose of implementing the GST was to get relief from the multiple taxation system on different items, to lower the cascading effect in the old taxation system, etc. Different states had different rates of taxes on the same goods. That was not conducive to business and industry. The businessmen had to face several problems or harassment. Many of them would maintain two or more accounts to lower the burden of taxes. In many cases respective departmental office persons would make an unholy league with businessmen to carry on the system. That system was also time-consuming and whence the cost of production increased. That is why the Congress thought that under GST, the system can be changed to a large extent. Actually that calls for long drawn out preparations to make it successful.

But the BJP-led government is implementing it hurriedly. There are several anomalies already in the new method. A lot of items are not included in the new tax system. the tax rates are many and some rates are very high. We raised the issue in parliament to include many products, including petroleum products, in the GST net. But that was not considered. As a result we see that the price of domestic LPG, particularly in West Bengal, has increased considerably. Is it mainly to make up ultimately the expected loss of revenue to implement GST? But this could be avoided had the implementation been thoughtfully done. Real estate had not been included in the GST net. This will create problems. The increase in the cost of inputs of the sector cannot be avoided in the new system. So real estate prices will go up.

The matter is more severe in the case of small traders and business whose turnover exceeds ` 20 lakh per year but not a big one. They are not well prepared. To maintain GST norms their operating costs will be high and that will affect them dearly. One important anomaly is that prices of common consumer goods from a small shop at the road side may be less than those bought from very sophisticated shops. So the item is not important here but the quality of shops decides the prices. In developed countries this can be possible as there the quality of shops does not differ much and population there is not as high as ours.

Lastly but most importantly the lack of preparation for implementing the GST is the main problem. Where is the proper government machinery to deal with the new method? In the near future the cases of misdeclaration of accounts may be a great problem. How far can the system depend on self declaration through online? Who are going to supervise it? Do we have enough manpower?

So the main point is that the implementation of GST is necessary but the main weakness lies in its hasty implementation. It is expected that the government will take necessary steps to reconcile all the problems faced in the coming days.

As told to BEs Kishore Kumar Biswas

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