A new era begins with GST

India has entered a new era in its economic history with the introduction of the Goods and Services Tax (GST). At the midnight session of Parliament where the new GST regime was launched, there was an element of political showmanship and an attempt to echo the country’s historic tryst with destiny on August 15, 1947. But politics should not dilute the importance of the GST, which is the single biggest tax reform the county has seen. It simplifies the complex tax system by replacing multiple taxes with a single tax which can be administe­red, monitored and collected without difficulty. The guiding principle is “one nation, one tax,” and the country becomes a single market. It is more efficient, reduces the incentive and scope for evading taxes and promotes transparency. It is designed to serve and protect the legitimate interests of producers, consumers and other stake holders.

The GST system is important because it is also a result of cooperation among political parties and states in a cacophonous democracy where political and economic interests widely differ and even contradict. The UPA government conceived it and did the early spadework on it, and the NDA government carried the work forward and is now implementing it. State governments had genuine and sometimes unreal reservations and apprehensions, but through a long process of debate and discussions, a consensual framework has been evolved. It involved compromises on all sides, and the GST may be seen as a sign of the strength of the federal idea which is a key feature of the polity. There are still complaints that some have gained more and others may be hit more. But in an unequal and hugely diverse economy even a uniform tax can have different results and implications. Everyone cannot be satisfied in equal measure. The long delay for the ushering in of the new system could have been avoided if parties and governments had taken the need for it more seriously and resolved the disagreements and differences earlier.

There are fears that the country is not ready for the transition to the new system. The infrastructure may not be fully in place. There is confusion even about the basic idea of the GST and how it will be implemented. Small traders, businessmen and many others are concerned, and some have staged protests. The many concerns and problems related to implementation should be addressed earnestly by the governments and their agencies, and the teething troubles overcome. The new GST system is not the ideal and the best, but may be the best possible now, and there should be attempts to improve it in future.

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