Dinesh Kamath's Editorial 'GST proves to be good for Indian economy' that was published in Newsband

GST proves to be good for Indian economy

Revenue collections by India’s goods and services tax regime from the first month appear robust, with just 70% of eligible taxpayers bringing in ₹95,000 crore. With many more taxpayers registering in August, the GST appears to have begun well.

A group of Central and State ministers has been tasked with resolving the GST Network’s challenges. To inspire confidence, this group must act not only expeditiously but also transparently. Procedural problems need to be resolved as soon as possible for industry to be comfortable with this switch-over.

The rate at which the GSTs are being collected, no doubt, it will create a fiscal room. But how these taxes will be invested in the welfare of public? The governments, whether of centre or states, have greater responsibilities for their men who votes them with some expectation.

The indirect taxes is really doing well in exchequer. The country's poor infrastructure raise the question on planning of the so called ruler. The growing rates of dissatisfaction among people show that the governments lack somewhere. What is needed and what you want are both different perspectives. A simplified tax regime lowering the slabs may ease the burden on taxpayers. Also, some items like aids for the disabled and napkins used by women are being taxed. Since they are essential, the tax must be removed on these necessity items.

Government should value the time of trade and industry, as they spend enormous time to file returns, though extended. The Council on GST should take prompt actions to solve the problems such as glitches in the website, frequent changes of tax rates and rules governing the regime so that there may not be any frustration in the minds of members of the business group. Their enthusiasm should be kept alive so that this unique tax reform yields expected results.

The single biggest problem is that those whose business volumes are less than Rs.50 L (and often within Rs.20 L) are unable to enter mainstream due to various reasons - and they form about 30% of India's Value Addition groups in both industry and commerce (employing almost 75% of labor force). Further, it is a fact that the entire business and commerce in India work on averagely about 30% to 50% of "Black" transactions - which cannot be stopped by coercive methods – and strangely that "Black" sector seems to have increased during the GST regime.

The central pool of collections under GST is seen to be "high" because both the State and Centre have combined together in the tax collections. Let us not look at the GST "problem" as mere Tax accounting; It is a gigantic Governance mistake (if not failure). Admitting to the errors of judgment so far is essential for a genuine course correction.

May the Committee on exports come up with feasible solutions. It seems harsh for exporters to first pay tax and then claim a refund, blocking up expensive credit, when many of them work on slim margins. 2. Unlike demonetisation, GST is good for the economy, so all of us should be patient with the initial glitches.