Post last lap, GST rates must be fair

With an all-party support, more visible in the Rajya Sabha where former prime minister Manmohan Singh showed his statesmanship in backing India’s most ambitious tax reform, the Goods and Services Tax (GST) has received the final go-ahead from Parliament to move towards its July 1 goal post. While it would be up to the GST Council to fix the rates for individual items in one of the slabs — zero, 5,12,18 and 28 — the utmost attention to this exercise is reportedly being given by the Union government at the level of Prime Minister Narendra Modi himself. The GST Council is scheduled to take up the rate fixation at its Srinagar meeting on May 18-19. Hopefully, the rates should be fixed in a fair manner so that the GST rolls out to the advantage of the common households without hurting the revenue of the Centre and the states. Health, education, essential commodities and agriculture should not be made to bear the adverse impact from the new tax regime.

Apprehensions expressed by the Opposition on whether agriculture is being brought under the tax net through the GST should be fully addressed. If at all, the GST rates should be finalised in a manner that the entire value chain of the farm sector should stand to gain. That would help not only the farmers but also the consumers. On the other hand, utmost care should be taken to ensure that the roll out is smooth and not rushed without full preparedness of the industry. While the July 1 deadline could be the best case scenario, the industry’s demand for shifting it by a few months is not out of place either. This is because the rates are not expected to be finalised before June, giving barely four weeks to trade and industry sectors and even to the states for implementation. Whether it is in July or September, a good amount of training workshops should be conducted among for stakeholders, including state officials, trade and industry representatives, with special focus on small traders and units.

Despite differences on a vast array of issues, the country’s political system has achieved a great success in the form of GST. It is no mean task to get a consensus within Parliament and the GST Council, which comprises finance ministers of all the states and Union Territories with different political shades, and many a time conflicting economic interests. For instance, the way the manufacturing states have come on board despite a change in the basis of computation of taxation to consumption is quite laudable.

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