Ad Here  
August
September
October
November
December
January
 
 
Public investments and welfare will surge Oh my GOLD Miles to go... Babes In the wood-RBI North block has little clue to curb inflation They add lustre to Padma Awards An eco-friendly commute in Mysuru CAD and the emergency thereof Breaking news or breaking credibility? What the big B should offer? It’s raining funds for states. Really? Skewed Economic Zones? Deming awardees galore! The deluge and the several kindly souls Policy Makers Better relations with UK... Reform this licence to…kill If not Tamil Nadu, where else? Focus on agriculture and human resources Much can be done by us A tale of two Bihar babus PC please be our Santa CSR, tech revolution and bank crisis Sardar Sarovar – the seventy year itch Focus on southern TN... In the horns of a dilemma Truce at Kasturi Buildings Need plan over the long term planning BJP can now hasten its thrust for reforms INDIA keeps its date with destiny Well-administered State Why (not) abolish? Kudos to GIM organisers... Little surplus after salaries, subsidies and debt servicing MS Installed Outward ho Economy through the month Welcome Measures. Work for 10X Change Chennai Airport-Ready for a rapid take off... Welcome rains for damaged roads... Ganesh’s mantras Babes In the wood-RBI North block has little clue to curb inflation Weaving wealth of western Tamil Nadu Much ado about nothing Two welcome measures from the chief minister... A dual GST that will protect prosperous states Technology and economic development should be linked Jobs - Lost, Changed or Gained No groundnuts in groundnut oil! TN - so much to offer... Sustainably developing manufacturing sector… Need for radical RBI reform Trail-blazing Tamil Nadu A Fine division of responsibilities Welcome move to widen the tax net… South India’s 100 most valuable companies A historic indirect tax reform Sowing seeds of hope How will it PAN OUT Cleansing Indian retail A gratifying record Low profile moves After all, customer is the king Tryst with GST 1800 parties registered with EC – Less than 60 contest elections Star of the South Pool energy prices An eventful week with VVIPs of Delhi Indian GST – Between extremes… Wanted: decentralised financial system The Great Fall Healthy finances of the Chennai Corporation Tax evaders’ get out of Jail-Free Card Strategic planning the missing link Research for survival... You too T M Krishna? A blueprint for the future Why throw baby with bath water? Make way for Make in India... Land, land everywhere, but... Industry can’t get it from Mars, yet When the examiner cheated... Rail-road Rajaraman
 
A historic indirect tax reform
Finance Minister Arun Jaitley and his team, as also the representatives of the states in GST Council, deserve compliments for bringing about this game-changing legislation.

The Goods and Services Tax is scheduled to roll out from 01 July 2017. This tax promises to benefit both the taxpayer and the tax administrator.  It aims at making India a single market with uniformity in tax levies across the country. When implemented, GST will eliminate the plethora of tax rates on goods and services, reducing these to four slabs for products and three for services. The system will also do away with the humongous corruption at check posts across cities and state borders. There are expectations that this game changer will expand tax revenues and increase GDP.  

The evolution of GST dates back to Vajpayee’s NDA I regime. A major success story of Finance Minister  Yashwant Sinha  was the introduction of uniform sales tax levied by different states and the concept of value added tax. Dr Manmohan Singh’s UPA government continued with the simplification of the tax regime and the roadmap for GST. It should go to the credit of  Finance Minister Arun Jaitley in having long discussions with state finance ministers ironing out differences relating to the states’ interests, adopting a consensus approach, and eventually getting the bill passed by the Parliament. 

 

Tamil Nadu’s effective presentation 

Tamil Nadu stoutly resisted the GST on the grounds of loss of income. In fact, it was one of the few states that did not pass the GST bill in the state legislature. Later it fell in line and provided invaluable inputs that resulted in arriving at the consensus of compensating losses fully over the first five years. 

In his long tenure as the chief minister of Gujarat, Modi had a full grasp of states’ tax revenues. He has repeatedly been stressing the importance of cooperative federalism. Jaitley gave full weight to this concept and agreed to the suggestions of the GST Council dominated by state ministers. 

Jaitley’s single-minded determination in building the consensus helped in the smooth passage of the bill in both the houses. Parliament sat for long hours in April and listened with keen interest to the viewpoints of the government and senior leaders from the Congress, the BJD, the Communists and the TMC. Since Congress took the initiative to work on GST, the passage was smooth. Even when Jairam Ramesh sought several amendments, Dr. Singh graciously helped in the smooth passage. The four bills relating to the Centre could thus be passed.

Now, the bills relating to the states have to be passed by the state legislatures over the next few weeks. Since the GST Council comprising all the states and the Centre had unanimously approved the details, this formality is expected to be completed before June.

But this is just the beginning.  Thousands of businesses across the country have to be prepared for the switch over. This process of education is going to be time-consuming. 

The services sector accounts for an estimated 60 per cent of the GDP but has been contributing only to 12 per cent of tax revenues. GST is expected to bring a much larger number of services under the tax net. The tax rate presently at 15 per cent is poised to increase to an 18 per cent. 

 

Will take a couple of years to settle down

Dr S Narayan, former Finance Secretary, says that it would take a lot of time to solve the glitches and settle down to the new regime. He points to the experience of developed countries like Australia and Canada taking around two years to adjust to the GST regime.  This delay should not matter. A similar significant change of bringing about uniformity in sales taxes levied by the states and the introduction of the value added tax was smooth and the economy settled down quickly to the change. 

Tax expert Dr. Parathasarathy Shome has pointed to the cost of tax collection that was 1.36 per cent dropping to 0.6 per cent now and is the lowest in the world. He suggested investing more on modernising tax administration. With the promise of increased tax collections, this should not pose a problem. The switch can be expected to improve the tax-GDP ratio, help eliminate tax evasion and ultimately contribute sizably to the GDP. 

Author :
Reported On :
Sector :
Shoulder :
RELATED NEWS
ABOUT IE
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
 
PRIVACY POLICY
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
TERMS AND CONDITIONS
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
 
CONTACT US
S-15, Industrial Estate,
Guindy,
Chennai - 600 032.
PHONE: +91 44 22501236
EMAIL: indecom1968@gmail.com