THE SENIOR ANALYST
almost eighteen thousand and this is no small
number. The extent of litigation once GST
replaces previous taxation laws will be huge in
number. The new legislation will lead to increase
in number of cases as the existing legislation will
be challenged. The existing dispute resolution
mechanism is hardly impressive as the cases are
pending in the department with cases as old as
ancient for hearing in the tribunals as on date.
India should think twice before enacting this bill
as India cannot afford the multiplication of such
litigation as the nation cannot afford to add
chunks of litigation to already existing ones.
Inevitability of GST in India
Implementation of GST will boost India’s eco growth:
Assocham’
‘Logistics, distribution costs will fall 15% under
GST regime’: Reiner A. Allgeier, Managing
Director, Schenker India
GST will remove cascading effect of levies: Pranab
Mukherjee
The GST will bring about a phenomenal change in
the Indian tax system by redistributing the
burden of taxation equitably between
manufacturing and services. The Finance
Commission had commissioned a study by NCAER
to assess its impact on GDP growth, exports and
at various other macroeconomic levels. The study
explores the impact of GST on growth through
direct cost reduction as well as cost reduction of
capital inputs because Cost reduction will be a
boon to producers and then the consumers will
be the ultimate beneficiary. Preliminary results
indicate that the growth in GDP can be between
2-2.5% with the implementation of a welldesigned GST and in a country like India which is
struggling with its growth rates currently, this
figure can add tremendous value. The increase in
exports can be between 10-15%. It is indeed a
staggering impact and demands an enthusiastic
action to pave way for a well-designed and
efficiently implemented GST at an early date. A
Jan 2014
single rate will ensure reduced compliance costs,
minimise item classification disputes, and ensure
uniformity in approach amongst all the players
involved. But to make it look attractive, a single
rate cannot be kept too high. At the same time,
the rate must be high enough to consider the
concerns and needs of states on revenue
neutrality.
For GST to be successful, all states and the Centre
should implement it in a similar fashion. Only
then will it bring about the national common
market. The GST will perhaps be the biggest
reform stimulus since 1991-92. An impeccable
GST and the New DTC will put India’s fiscal
system on radar of the world market economies.
Even a 2% reduction in cost will increase the
profits by around 20%. This will attract more
investments. As tax cascading disappears, the
industry will move to the regions which have
been lagging till now because of lower costs and
thus bring these into the growth dynamics
furthering the holistic development.
By Koundinya Nellutla and Saurabh Bhuwania
(Faculty of Management Studies- Delhi)
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