GST - Is it a win-win situation for all?
GST
I do not know whether it is going to be ‘win-win situation’ on not, but looking to the following inherent pitfalls, I have my doubts that it will genuine give the benefits, which are widely talked about including the one that GST will boost India’s growth in GDP by 2%:
1) The dual rate of GST (i.e. Central and State GST) is simply duplication of timely tested, relatively well settled and industry friendly existing Indirect Tax Systems i.e. Central Excise / Service-tax (at the Central level) and VAT (at the State level). What new thing, the proposed GST is going to offer other than the existing Indirect tax regime in India. Mind you, dual rate of GST means dual tax administration with added confusion.
2) If the Govt really wants to make further fine tune the existing Indirect taxes, it should make Central Sales Tax, Vatable, which is an expense today to the Industry. If this is done with proper internet networking across the Country, then where is the need for GST in this country?
3) GST is ‘copy paste’ from Western and European countries - except USA, where still sales tax is operational. The constitutional, political & business environment of these Countries is totally different than India. Such ‘copy paste’ GST would unnecessary hamper the image of India abroad, if not implemented properly.
4) While taking cue of implementation of GST from western countries, we are conveniently forgetting to include local body taxes (e.g. Stamp Duties, Entry Tax or Octroi), Liquor, Tobacco, Electricity and Petroleum products. If we include these items (albeit too difficult to include) in the proposed GST regime, it will serve true purpose of one rate of indirect taxation in Indian and would achieve magical 2% Growth in GDP in real sense.
Sanjay Prasad
22/02/2015
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