The GST council has been set up to enable Union and State Finance Ministers to recommend tax rates and laws. It failed to sink differences last week in the second leg of GST legislation. The winter session of Parliament will make no progress and the aim of introducing the new tax by April 2017 will not be met. GST is the Government’s most ambitious economic reform which will benefit the entire economy demolishing fiscal barriers between states. India will be one integrated whole. But the Government and the Opposition naturally cross swords over it. Demonetisation is proving an obstacle to accord and action. The Constitution has been amended to enable legislation to enforce it. Many Indian states will benefit. There should be no effort to defer it.
According to the Constitution amendment, the law has to be passed by Mid-September, 2017. That means both sides must hurry to arrive at a consensus. Demonetisation should not be a political issue stalling GST. That will cause economic slowdown and reduce potential tax revenue. It is necessary for the Centre to win the trust of the states. Both sides should realise that GST will ensure greater tax compliance. That will help the war on black money.
