At the stroke of the midnight hour in Parliament on July 1, India will make its tryst with GST (Goods and Services Tax).
>The GST is India’s biggest tax reform post independence and represents a massive structural reform that will change the way business is done in the country. Its stated aim – one nation, one market.
“Many other countries had got VAT or GST quite early, but we started only in 2005… In India, we are now going to implement a single value added tax across the value chain. As far as the consumer is concerned, it is a single GST – the same rate on a single product anywhere in the country.” Touching upon concerns of prices rising as a result of the implementation of GST, he said there will be a focus on consumer education – “The first thing is, when we have got too many retailers selling the same product, the competition itself should take care of this. The second thing is, we’ll be doing consumer education in a big way – consumers need to be told about the existing incidence of tax on each product, including the hidden tax which they do not see.” But to get down to the nub of it, will GST truly bring down prices for the common man?
Writing for Moneycontrol, Anita Rastogi of PwC harped on how GST is good for the common man with low tax rates on daily-use items. “Riding a cab may become cheaper as the current effective rate of service tax is 6 percent which will get reduced to 5 percent under GST. The essential commodities like food grains, milk, bread, fresh fruits and vegetables, flour, besan, salt, fresh meat, fish, chicken, eggs, butter milk, curd, paneer etc. amongst other things will be under the nil tax rate brackets under GST. “The horizon is changing both of a ‘common man’ and ‘tax regime’. To espouse the expectations of both, the Government is fueling all necessary measures and one such step is upcoming GST. It is expected that new regime will subdue the overall prices of commodities and its accessibility.”
In the Scroll, Amba Salelkar turns her attention to one group of people who are bound to be aggrieved by the GST, despite all the government hype around it – India’s disabled: “The government has once again failed India’s large community of people with disabilities. Many assistive devices for persons with disabilities and services for the disabled will be taxed at between 5% and 18% under GST.” The piece goes on to state how certain items will be taxed: “Under the GST regime, wheelchairs and many other items will be taxed at 5%. Orthopaedic appliances, including crutches, artificial limbs and hearing aids will be taxed at 12%. All products including braille paper, braille typewriters and braille watches will now also be taxed at 5%, while braille printed books will be exempt from tax. Adapted cars for physically handicapped persons will be taxed at 18%.” “Disability rights activists rightfully believe that this move will make these aids and appliances unaffordable for persons with disabilities and impinges upon their right to life, communication and movement,” she writes.
Nipun Malhotra, Founder, Wheels For Life, also blasted the GST on wheelchairs and braille paper terming it equivalent to a tax on walking or seeing in his opinion piece in The Hindustan Times. Others turned their focus to implementation issues and possible chaos initially.
In a column for The Hindu, Puja Mehra writes that the GST is a work in progress and there are must be fixed urgently – “The GST, to be collected on everything from matchboxes to gold, will touch everyone. A modern tax system should be fair, uncomplicated, transparent and easy to administer. India’s GST does not pass these tests convincingly. It is too complex. We must collect it at fewer and lower rates, and on more items.” “The lingering imperfections, and disregard for economic principles, will limit the GST’s transformational potential. Small firms, unlike industry chambers and lobbies, are not vocal, and therefore not easily heard. Increasing simplicity and reducing the complexities remains a promise made, not kept.”
Writing for The Wire, Chandrajit Banerjee, Director General of CII (Confederation of Indian Industry) sums up the approach of GST: “The industry recognizes that introducing an entirely new and vastly improved tax system will cause initial hiccups. The central and state governments and political parties have exhibited strong interest in ensuring the success of GST. With these synergies, GST implementation is not a cause for undue worry but a reason to celebrate.” The last word to Bloomberg, who focused on the one group of people who always have a lot to cheer about when a complex law is implemented – the lawyers.
The news agency quoted senior lawyer Arvind Datar who termed “The present goods and services tax is the most complex” in the world in an article headlined Lawyers in India are smiling as GST set to fuel litigation wave.