iNM Magazine Volume 7 | August 2015
Current Buzz
With the dual system of GST the SGST can be levied by the
state within a band of spectrum this critics argue kills the
concept of a single market as various tax slabs would be
introduced . Further, the centre has promised
compensation to the states for the losses they incur due
to GST but none of the state have come up with a plan to
compensate local bodies. Also, the pile up of litigation in
an already slow judicial system remains a major concern.
tax structure and provides a general rate that can be
applied by all companies.
Administrative challenges: In India mergers between
various government entities has not gone very well
everyone remembers the debacle of the Air India and
Indian Airline merger. Here we are talking of integrating
the revenue collection agencies of all state and a powerful
central agency which by no terms is easy. Central excise
took various decades to settle down and there are still
litigations regarding irregularity of sales tax pending
before the Supreme Court.
After a quagmire of procrastinations the bill has finally
been passed by the Lok Sabha currently the bill has been
referred to the select committee and will need 2/3 rd
majority in Rajya Sabha and ratification by more than
half of the 29 states before it can be rolled out by April
2016.
Appeasing the states: e additional 1% GST proposed to
appease various manufacturing states is against the
principle of GST this levy would result in a cascading of
tax with each interstate movement and will severely
undermine the growth of a common market place. Also
major goods such as petroleum and alcohol have been
excluded from the purview of GST this does not augur
well for fiscal prudence and the economic front as they
are the major source of revenue for any tax.
e time is ripe to move forward with the 'Imperfect GST'
for now which has been fractured by compromises on
various key issues. People often forget that the word
'ideal' is often utopian in a federal democracy like ours.
Reforms in a democracy are often incremental as
opposed to game changing and big bang what most
people expect.
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