The GST story is one of initial success
Source: Business Standard
It is almost a month now that the Goods and Services Tax (GST) regime has been operational. In terms of the constitutional amendment made last year and notifications issued under it, the GST regime had to be mandatorily implemented by September 2017. However, both the policy-framers and legislators worked in fairly synchronized fashion to put in place the necessary legislative and regulatory structures and commence on the design from July 2017, clearly manifesting the zeal to reform the indirect tax paradigm swiftly. Further, the integration of Jammu & Kashmir State within one week of the GST commencement despite material constitutional challenges facing the integration (of the State) in the GST regime, reflects the importance given by the Government to the idea of ‘one nation one market’. On this ground alone, the efforts of North block is laudable.
It is observed that the role of the Government has not been confined to merely placing the necessary regulations. Acting in the true spirit of reform, the senior officers and field formations, particularly from the Central Government, have sought to engage in educating various stakeholders on the finer nuances of the new regime. Through the medium of twitter handles, regular PIB clarifications and newspaper briefs, the Government is ‘walking the talk’ and promise of ‘handholding’ various stakeholders in the initial stages of implementation. The details available on the CBEC’s website relating to GST awareness reveals that almost four thousand lectures / seminars have been held across the length and breadth of India, a clear indication of the seriousness with which the officials have committed themselves at the ground level. The level of information dissemination is in itself overwhelming as the Government is leaving no stone unturned for a smooth transition.
It is clearly evident that within this short period (i) check-posts have been removed from State borders, (ii) the average time for the interstate transportation of goods has been considerably shortened, and (iii) businesses are reporting that transportation costs have reduced owing to the drop in interstate movement of untaxed and underreported cargo. At the ground level, it goes to establish that the idea of common market is finding its feet with minimal disruptions.
Calibration of GST rates, a politically sensitive exercise has been kept close to the erstwhile rates. Owing to availability of credit (which undoes the cascading effects in the erstwhile tax regime), despite the tax rates being same, the net incidences of tax on goods and services seems to have come down. July month of GST is an appropriate reflection, the fears of GST leading to inflationary trends seem to be unfounded though it’s still early days. Regular notifications by leading businesses reducing the prices validates the promise of GST. The soon to be instituted anti-profiteering authority will only lend speed to the process of rate rationalization. The first steps of GST create a reasonable expectation that the chances of prices of goods and services dropping is a fair expectation. The enforcement of GST design is therefore not just a shift in legal paradigm but enhancement of the economic policy goals.
An important event which will be keen watched is the first reporting compliance trigger. Given that GST is a technology intensive platform and its success is contingent upon the compliance levels, the Government needs to ensure that the stakeholders get acclimatized to the GSTN interface. This may turn out to be a challenge, given that computerization of the retail sector (which is largely unorganized in the country) is essential. One would hope that the Government will address the concerns with equally strenuous effort to ensure smooth transition.