Finance Minister Arun Jaitley has justifying how the new tax regime, introduced in July 1 this year, had been guided by the principles of equivalence and revenue neutrality, as the old regime, where the central excise was embedded in the cost, so people didn’t realize and with the cascading effect of excise, VAT, the taxes added up to 31 per cent. Keeping with the equivalence principle, that is how the 28 per cent GST slab was born.
Jaitley further informed that the GST Council in the last 3 to 4 meetings has slashed rates on over 100 items, thereby bringing them down either from 28 per cent to 18 per cent or from 18 per cent to 12 per cent and has been gradually bringing them down. As the revenue collections neutralise, the Council suggests that the rate must prune it and that is the pattern in which the Council has so far been functioning.
The Council officials had informed that last week’s review considered cutting rates on a variety of items like handmade furniture, plastic products and daily use items like shampoo, and simplify return filing rules to be formally announced in the scheduled to meet on November 10 in Guwahati.
In its previous meeting last month, the Council adopted a concept paper that laid down guidelines for changes in rates. As per the paper, no manufactured goods should be given outright exemption as this would hinder the ‘Make in India’ initiative. Besides, states should opt for direct subsidy transfers if they wanted to reduce the tax on any item.
Assam Finance Minister Himanta Biswa Sarma while welcoming the meet stressed that the meeting assumes significance for several reasons. First it will be the first review of the three months of implementation of the new tax regime. Several committees like the composition committee, the rationalization of rates committee and the GST network committee will submit their reports in the meeting and it will be discussed.
For the state of Meghalaya, there is a need for discussion on how to sensitize the taxation department of respective states, who are as confused as the masses; there is only talk on how to give a push to the economy which has witnessed a slowdown and which has in turn affected the nation.
Since demonetization on November 8 last year and the roll out of the GST, the daily wages laborers who went back to their respective villages are yet to resume work. It is expected that as the harvesting season is nearing, it is hopeful that the workforce in the small factories will resume work soon.
The most affected section of the society is the individual entrepreneur and professional. The entrepreneur includes the small traders, manufacturers and service sector, who do don’t have bulk purchases in terms of raw materials for their business, will find it difficult to claim the refund.
On the other hand, the professionals like designers, artists and artisans, performers and resource persons for the Central government departments have all come under the GST and have either shut their one room offices or have stopped providing services as they could not register for GST number as their incomes are not consistent because it is purely on contractual basis.
The professionals could have been utilized in the training programmes for the Make in India flagship programme, but such an indirect tax which was introduced in India on July 1, 2017, has prevented them from rendering their expertise or services, this is direct suppressing the Human Resources of the country.
According to research, since the demonetization till GST, as many as four lakhs people have lost their jobs and the number is still rising. The manufacturers, dealers, and the retailers too have limited their manufacturing and purchases respectively, till the GST Law is streamlined. This is one of the main causes of the economic slowdown, as the masses now refuse to spend. It also means that there are less jobs in these sectors which has further created unemployment problems.
It is time that the Modi government accepts yet another poor execution of the schemes, as Prime Minister, Narendra Damodardas Modi always seems to be a man in the hurry. Before rolling out GST, the government should have given enough time for the manufacturers to either recall all the old stock, or allow the new stock to be filled in the market before the new law was rolled out. As of now the consumers are paying both the old VAT and the new GST on all products which is one of the main causes for the high spending for all citizens. This itself shows there was no proper planning by the Finance Ministry, which has also put the Taxation Department in dilemma.
Of course it is impossible to roll back the new law, but it is time for all departments to lend their expertise to the GST council to reformulate the new law such that it is easy for filing returns while at the same time it delivers on the assurance that it will bring down the cost of living.