The opposition realized the success of GST..!! But they don’t want us to?
The only thing that is constant is the Change, yet we resist the change. The change may be for better or for worse. Biologists say that we fear unknown and hence resist change. Goods and Service Tax is one such change that created recent turbulence. But of course here various stakeholders resist change for various reasons. For example, MSME’s & traders resisted because they have to change the way they do business and other compliance issues and costs associated with it. Common man feared because he was unsure of movement of prices of goods and services. The resistance is even higher when there is a perception of threat due to change. Opposition camp is worried because GST is showing early signs of success. Before people realize this, they are planning to create chaos and pocket some credit and if possible a few seats in upcoming elections. Let us get equipped with few metrics using which one can evaluate GST and determine whether it is successful or not. A rational evaluation of GST make things lucid while exposing the evil intentions of highly educated but brain washed people with vested interests.
Main objective of GST is to reduce complexity in taxation. Can we even guess that how many taxes were replaced by GST? 18 different taxes..!! It takes a life time for a new entrepreneur to understand which all taxes should he register for and pay. The tax structure was so complex that it gave them a ruse to be non-compliant. Even if a business was given tax relief, it would take months to figure out which tax is exempted and which is to be paid. When such a complex structure is simplified, it is quite natural that ease of doing business increases and so the compliance levels among people. Recent World Bank rankings about Ease of Doing Business & also the Moody’s rating upgrade are just the harbinger of Acche Din.
One Nation One Tax:
One major goal of GST is to have a single tax for the entire nation over all products and services. Recent GST council meeting has reduced the tax slabs in GST to four from five. The fifth slab has just 50 items left in its fold. In future this may go down to three or two. But this objective of single rate seems difficult to be achieved. For those who argue that there are single rates in Singapore? Why can’t India have a single rate? To answer them, just look at the gini coefficient of a country. Gini coefficient talks about the disparity in income levels between rich and poor of a country. With such a high disparity in the country isn’t it is unfair to charge 18% on everything? Charging 18% on rice, wheat, milk, sugar, pulses etc. which all the people including the BPL families consume doesn’t make sense. Government being cognizant of this and with an intention to not burden the citizens, has introduced slabs systems. Government seem to aim at gradually reducing the number of slabs.
Government has been saying from long that with GST rates will come down, Did they??
Was Harbajan actually right? Let us compare hotel bills Pre GST, Post GST (18% & 5%)
GST @ 18%
GST @ 5%
Service Charge @ 10%
Service Tax @14%
KKC @ .5%
SBC @ .5%
Now I wonder whom did Harbhajan eat with before? What is appalling is not the way he put it, but the way the joke was retweeted. It only shows that people haven’t understood GST correctly and now it is the responsibility of the Government to make people aware of implications of GST. Keep an eye out the next time you are in supermarket as they are about to publish rates before and after GST this week.
Increased Compliance, Return filings & registrations:
The number of total GST registrations has seen a multifold increase in the last few months. At the end of August, there were a total of 60 lakh GST registrations. That has increased to over 1.1 crores by the mid of November. Filings of the summary returns GSTR-3B with which the tax needs to be paid or nil liability claimed have gradually increased over the months since July. Till the August 20 deadline for filing GSTR-3B for the month of July without fine, 34 lakh returns were filed. Returns filed before the respective deadline for September was higher at 39.4 lakh and the number for October grew further to 43.7 lakh. The steady rise in the number of taxpayers filing their GSTR-3B returns every month is a success factor. But the concerning factor is that a large number of GSTR-3B filers (around 40%) continue to claim nil tax liability.
Government is expecting a compliance gain of 2 lakh crore as best case scenario. In July 2017, had GST not been implemented and assuming 100% tax able citizens paid tax, Government would have got around 90,000 crore. But with GST compliance still under progress, so far only 57% of the tax payers paid but the amount exceeded 92,000 crore. Same is the case with other months. At present tax revenue of Indian government is just 21.4% of GDP. This is much below the average of OECD. Ideally this metric should rise after implementation of GST. But with ongoing structural reforms and shocks to the economy and also by organizing businesses, GDP might grow drastically and in which case the ratio will fall. The Center and state budgets which were of 30 lakh crores in 2014 got magnified to 40 lakh crore and are further expected to increase to 50 lakh crore by 2020 with continuous reforms the governments are implementing.
GSTR3B filings by deadline (In Lakh)
Eligible tax payers (In Lakh)
% of tax payers filing returns
Why is this giving sleepless nights to Opposition?
Just like a rocket soaring to its destination, GST is firmly on its track to make our economy transparent, clean and strong. In terms of registrations, returns filing, revenue collection, rates reduction and simplification of taxes, GST has started showing signs of grand success. But the opposition is in no mood to realise the reality. No government in the world that passed GST got elected for a second term. Maybe this is what opposition pinned their hopes on. To derail this success of GST, they decided to create chaos. Many such propagandas include that GST is less than 10% in other countries and government is cutting rates just to appease voters before elections. True GST is less than 7% in Singapore but it started with 3%. Singapore has revised the rates upwards twice in last two years. Look at the compliance ratio in Singapore where 75% pay taxes. We cannot achieve the status of super power or we cannot compare ourselves with that of super powers without big bang reforms.
– Anugula Rakesh Reddy
BJP Official State Spokesperson, Telangana.