Prime Minister Narendra Modi added a touch of uplifting glamour to the rollout of the Goods and Service Tax (GST) when he said that even Einstein (who won the Nobel Prize in Physics in 1921) would have been confused at the state of taxes in India. But judging from the reaction of traders and other sectors, confusion is the order of the day over the newly-minted GST. One storekeeper who keeps over 2,000 products was up to his neck in confusion as he pointed out to the numerous items on his shelves that invited various slabs of GST. Perhaps most of the worries are really genuine, like in the amusing example of asses and mules being taxed differently from horses with the latter being considered the possessions of the rich and the latter belonging to the poor man, like your dhobi. Looks like there will be a spate of litigation which will benefit only lawyers. The authorities need to look into these issues and hold meetings regularly to take stock of the problems arising during implementation.
People cannot be blamed for being sceptical over resolution of the situation by this government as the dark days of demonetisation and the untold hardships caused, particularly in rural India, are still fresh in people’s mind. West Bengal’s finance minister Amit Mitra’s prediction that GST will fall flat on its face as it was introduced in a hurry does seem a little far-fetched. Similarly, traders who are not computer literate and those in areas where there are repeated power blackouts will find it difficult to deal with GST, the backbone of which is information technology.
Meanwhile, it is quite curious that GST should be given a star-studded midnight welcome reminiscent of the ushering in of Independence with Parliament all lit up. It is the most significant tax reform that will do away with 17 taxes and 23 cesses by the Centre and states, but as the Kerala finance minister who boycotted the ceremony said all the pomp and show was unwarranted when people were being lynched. He has a valid point and it is an interesting subject of a debate. Most of the Opposition parties, which supported and helped in the creation of the GST, boycotted the function for this reason. The Prime Minister, however, paid tribute to the cooperative federalism which got the GST through Parliament. While the various parties felt that the show was unnecessary, the Congress hit the nail on the head pointing out that the GST rate where the highest tax slab was 28 per cent was the highest in the world. One shares the confusion of an analyst was rightly confused as the locals did the Bhangra outside Parliament welcoming a tax on the people! It was indeed like a madhatter’s tea party.
The way forward now will be to see that the implementation of GST is done efficiently and will reduce the scope for corruption and really put an end to the inspector raj which terrorised traders. Simplicity is the underlying leitmotif of the GST and it is hoped that it remains so during implementation and not perverted by bureaucratic procedures.
