By Jatin Bavishi
The Goods and Services Tax (GST) was hailed by the government as one of the biggest tax reforms in the history of independent India. However, as most things in India, this otherwise Good and Simple Tax has turned out to be a messy affair. In any case, the GST replaced a proverbial khichdi (hodgepodge) of indirect taxes.
Move to lower tax slabs
The GST Council, which is the highest decision-making body with regard to GST, has been meeting every month since its implementation. It is headed by the Union Finance Minister and all the state finance ministers are its members. The next Council meet will be convened in Guwahati on 10th November 2017, and the expectations are already running high. In its previous meetings, the Council provided a string of relief for businesses to help them cope better with the new tax regime. A panel of state finance ministers has already dropped loud hints about pegging the rates lower.
A few state finance ministers have pointed out that several common-use products face a 28% levy. Items such as bath fittings, cement, and steel products used as construction rods are in the top bracket. Officials in the indirect tax wing of the finance ministry also agree that there are too many items in the top slab. Jaitley too has indicated that, in the medium term, the aim is to move to fewer slabs.
Relief for traders?
The greatest expectations come from traders and small businessmen who have complained that the implementation of GST has increased their tax and administrative burden. Prime Minister Narendra Modi has indicated that the Council meeting will carry out more changes in tax measures to “strengthen” businesses and the economy. He, however, put the onus on the states and seemed to be wary of the possibility of some state playing spoilsport.
The business scenario in India
India jumped about 30 places to 100th on the World Bank’s “Ease of Doing Business” rankings. Hence, while on the one hand, it is important for the government to further improve the processes for facilitating business, it must keep a balance by not tweaking rates in quick succession. Any form of uncertainty can put a massive drag on the overall growth. It would be interesting to see how the meeting pans out, especially given the fact that it comes at the backdrop of elections of Gujarat, which is a stronghold of BJP, with the small traders forming a core constituency for it.
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