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The Goods and Services Tax Council has made some breakthroughs on outstanding negotiables that were holding up the introduction of the indirect tax regime (a government, especially an authoritarian one). A compromise has been reached between the Centre and the States on the formula for administrative control over taxpayers under the GST, which will subsume (include or absorb (something) in something else) myriad (countless or extremely great in number) existing State and Central levies on commercial activity. By giving up on its formula to split such control by assuming the authority to levy GST on all services entities and manufacturing firms with ₹1.5 crore or more annual turnover, the Centre has shown a willingness to meet the States more than halfway.
The new control-sharing system appears simpler to administer. Now, 90 per cent of all GST assesses with a turnover of up to ₹1.5 crore will come under the watch of the States and 10 percent under that of the Centre, with both getting to assess half of the firms with a turnover over ₹1.5 crore. More important, it gives States, many of which had claimed at recent GST Council meetings revenue losses following the demonetisation of currency notes, the leeway (the amount of freedom to move or act that is available) to claim that they have struck a better deal with the Centre on a reform that is now inevitable (certain to happen; unavoidable).
With the Centre finally laying to rest its hopes of an April 1, 2017 rollout and eyeing a ‘more realistic’ July 1 date, it has some room to tinker (attempt to repair or improve something in a casual or desultory way) with a few indirect taxes in the Budget to provide a short-term pre-GST stimulus (an interesting and exciting quality) to the economy that is facing a flurry (a small swirling mass of something, especially snow or leaves) of growth downgrade projections. Since the trickiest issues between the Centre and the States are now resolved and only legislative drafts remain to be approved when the Council meets next on February 18, it is an opportune time to address some of the concerns raised by another key stakeholder — industry.
Firms have indicated they would need about six months to gear up for the new tax regime once the laws, rules and all the minutiae (the small, precise) of implementation, including the rates for different products and services, are known. More clarity and finesse are also needed on the harsh penal provisions, including the power to arrest, proposed in the draft GST law (that lists out 21 offences) and the creation of an anti-profiteering authority that can act against firms that fail to pass on benefits of tax rate cuts to consumers.
While it is important to protect the consumer, a clear rule-based framework is necessary to ensure that one of the biggest gains envisaged (contemplate or conceive of as a possibility or a desirable future event) from GST — an exponential change in ease of doing business — isn’t scuttled (run hurriedly or furtively with short quick steps) by fears of a return to inspector raj. For a government committed to ending tax terrorism, taking a step back to meticulously (in a way that shows great attention to detail) review the possible gaps between intent and implementation may be worthwhile — even if it means delaying the launch by a few fortnights.
