Read Editorial – Next steps on GST
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MEANINGS are given in BOLD
The lok Sabha has duly (in accordance with what is required or appropriate) given its assent (the expression of approval or agreement) to necessary Central legislation to operationalise the Goods and Services Tax, nearly 17 years after the government began discussions on the prospects for a unified indirect tax regime (a government, especially an authoritarian one) across the country. It is eyeing (look at closely or with interest) a July 1 rollout for the GST, which will replace the multiple Central and State-level taxes and levies (charge; demand) that make doing business in India a compliance nightmare (a frightening or unpleasant dream) today.
The long and winding road for this reform, punctuated by political about-turns, has had a fairly straight trajectory (route; path) in recent months, following the constitutional amendments last August. The GST Council has managed to thrash out a consensus on several issues relating to the administration and the legislative provisions for the new tax system within six months. The fact that apparently intractable (hard to control or deal with) positions held by the States as well as the Centre on the sharing of administrative powers, for instance, have been reconciled without the Council resorting to a majority vote inspires confidence.
So does the alacrity (eagerness; willingness) with which the Centre has moved to secure Parliament’s nod (have a tendency to do something) for four enabling pieces of legislation within a fortnight (a period of two weeks) of the Council’s approval. State Assemblies should do the same to pass the State GST law by holding special sessions if need be. For Indian businesses that have been seeking (attempt to finds something) the reform (improve), it is now time to come to terms with the fine print and embrace (an act of accepting something willingly) the tax system.
The GST Council, meeting again on Friday to clear four pending sets of regulations, must sign off on which of the five GST rates will apply to different products and services. Clarity on the applicable rates will help industry alter their accounting systems, supply chains and pricing strategies. But some provisions in the GST laws have the industry in a tizzy (a state of nervous excitement or agitation). While the highest GST rate has been pegged (fixed at a particular level) at 28%, the integrated GST law has set a ceiling of 40%.
Though an enabling provision, it gives the government too much leeway (the amount of freedom to move or act that is available) to alter the rate structure in coming years without seeking Parliament’s nod. Compare this to the cess ceiling of 15% on luxury cars, for instance, which are likely to see a 12% cess to start with. On several other fronts, the final laws haven’t changed much from their draft versions, despite industry red-flagging (indicate; identify) several provisions.
These include the anti-profiteering clauses to curb (a check or restraint on something) ‘unjust enrichment’ of firms, the requirement for branch offices to register separately in each State, and treating all transactions between related parties (including head office and branch offices) as taxable. For the services sector, in particular, compliance requirements could go up multi-fold. It is still not too late for the GST Council to offer some exemptions (release; relief) or resist operationalising some of these provisions through the subordinate rules and regulations in order to address genuine industry grievances (wrong; injury).
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