The Goods and Services Tax (GST) launched by the NDA Government on July 1st is a brave attempt at introducing a transparent taxation regime where compliance is rewarded and evasion attract stringent penal action. The one nation, one tax slogan is being received with mixed feelings by the business community. What is clear is that the ‘business as usual’ regime is over and so too the physical interface between tax official and tax payers. The reduction in human interface automatically means a reduction in corruption. Before the GST, those manning the Sales Tax Department literally lorded it over the large and small business owners and often harassed them. Now that all transactions and processes are digitized it will be an era of non-intrusive administration. GST will also facilitate the taxpayers by prescribing grant of refund within 60 days, and provisional release of 90 per cent refund to exporters within 7 days. Any delay will result in payment of interest and the refund would be credited to the taxpayers account. Above all its is envisaged that the GST would control profiteering, since neither the manufacturer nor the other buyers down the line will be charged more than the prescribed taxes. It is also expected to improve the ease of doing business in India in which the country scored very poorly until now.
Critics of the GST, and there are many, have opined that countries that have implemented the GST have seen those governments lose the next elections. If that be so, it can be said that the NDA Government has shown extreme courage to take the plunge despite knowing the consequences. The Congress party has meanwhile taken the credit for initiating the GST. The question then is why did the Congress not bite the bullet when it had the mandate to rule the country?
In Shillong city, Friday evening witnessed a flurry of activities in shops selling electronic and electrical gadgets even as the proprietors gave away items at 50% of the cost. This apparently was done because taxes for all the items have been paid under the old regime and reformatting the taxes under GST would require phenomenal accounting work. So the lesser the goods remaining with the dealers on July 1st the easier is for them to cope up with the process.
All change is painful and as Finance Minister Arun Jaitley says, there will be initial hiccups but these can be corrected along the way. For the NDA Government the GST is a big leap of faith. For India it is the beginning of a new post-independence era.