GST (GOODS AND SERVICE TAX) EXPLAINED IN SIMPLE TERMS 

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Some thoughts of mine on GST that is sought to be implemented by Jaitley, from Sep 2017. I have kept this post non technical, sharing the macro perspective behind this brain-dead exercise, which will be an unmitigated disaster. Here we go.

1. GST (Goods and Services Tax) is a very noble concept, built on the bedrock of “One Nation, One tax”. Many advanced countries use that and rightly so. For example, in Singapore the GST on all products is 7% and the matter ends, right there. Nothing more.

2. Now what does this Govt. propose to implement after touting that “GST is the biggest tax reform in the Indian History”. The act in its present form is a horrible idea that should never come but which unfortunately shall come about shortly.

3. Like Singapore if Jaitley had come up with just 1 set of GST with 3 broad rate slabs, that would have been ideal. The 3 slabs should have been, “basic necessities”, “makes life better” (with items like a mixer, a coffee maker, a bread toaster, a cycle & such others) and the last one for “luxury goods” (like a Plasma TV, high end cars, diamonds & others).

4. The critical point out here is, after the tax rates are announced, no other body in the country should have any right to levy taxes or cess to jack it up further. Is anything of this sort attempted now by this senseless Govt. They have done exactly the opposite.

5. They have now amended our Constitution for the 101st time, by which both Centre and the States have been empowered to levy taxes at its will. Centre can fix a rate and each of the 29 States can levy further. Consequently any maverick State Govt. can torpedo the tax structure in no minute.  

6. When they should have taken away all the powers from each of these State Bodies to tamper with the rates, they have re-affirmed their right to impose additional taxes at will. Essentially the “basic tenet of GST” has been hit for a six. We are not talking of “one nation, one tax” but “one nation, 30 taxes”. What kind of a nonsense is this. 

7. We are then back to around 32 taxes, comprised of 29 State Taxes, GST of Centre, Service Tax and Excise duty and they can keep raising each of them, to suit their financial needs. This is just blasphemous. The price of products will never be the same across the country. Goa would continue to sell liquor at cheaper rates and Silvaasa would still keep offering cars at a lower price.

8. Nothing & just nothing has been achieved by this exercise. In fact, he is about to create a royal mess. Earlier, as a Service Provider, I had to file just 2 returns in a year. Now from September, the figure of 2 will go up to 49. I am giving you the essence and not dwelling on the micro issues. 

9. There are many more macro aspects that are extremely adverse to both businessmen and the end consumers. I would capture them in phases in my posts later, else this piece could get unwieldy.

10. These set of laws are anything but GST, in the normally understood form. This is going to be worse than the consequences of Demonetisation. Our Jaitley likes to keep coming out with new diktats on a daily basis, like the way he has proposed 3% GST on Gold, just a few before, after the basic announcement.

11. He has purposely not brought “Real Estate” within the ambit of GST, which is one of the biggest sources of black money generation in our country. Do you recall the way he came up with over 100 odd clarificatory amendments after Demonetisation. He has just gone stark mad. Opposition has been silenced. 

12. Such a major exercise should have been done in phases, whereby the Govt. could have learnt the problems at ground level & kept making course corrections. He has left no room for any such sensible process. With the “unbelievable and unheard of 31 amendments to the budget of 2017” Jaitley has effectively decimated the Sales Tax Structure of our nation.

13. People of our country will end up paying a huge price. The prices of all items would certainly shoot up, businessmen will resort to unethical hiding of their transactions as there are legal loop holes to indulge in it unabated. Black money generation will go up merrily.

This exercise is complete madness and Jaitley, the part time Finance Minister is just ruining the nation, further. He should just go now.

BY BRM MURALIDHARAN 
The views expressed are solely of the writer. The website may not subscribe to the same. 

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