One more fail­ure

Af­ter one year of GST, the num­bers sug­gest that the new tax is not just dis­ap­point­ing but fis­cally dam­ag­ing and its im­ple­men­ta­tion is rid­dled with anom­alies.


JULY 2018 marks the first month of the sec­ond year in which the much-her­alded Goods and Ser­vice Tax (GST) regime has been in place. When launched 13 months ear­lier, in a pro­pa­ganda blitz that (wrongly) claimed that this “one na­tion, one tax” sys­tem was a gamechanger, the gov­ern­ment had promised that the new regime would help the Cen­tre and the States to ef­fi­ciently mo­bilise the re­sources needed to put on a high-growth tra­jec­tory. In fact, de­mon­eti­sa­tion and the GST regime were pre­sented as the two ini­tia­tives of the Modi gov­ern­ment that would trans­form In­dia.

De­mon­eti­sa­tion, as the gov­ern­ment’s own num­bers pro­vided in the Re­serve Bank of In­dia’s lat­est An­nual Re­port es­tab­lish, has been a fail­ure from the point of view of stated ob­jec­tives such as freez­ing and ren­der­ing worth­less black wealth held as cash, pre­vent­ing coun­ter­feit­ing and en­cour­ag­ing a shift away from cash to dig­i­tal trans­ac­tions. And now it is be­com­ing clear that GST is prov­ing a fail­ure too. In fact, from the be­gin­ning of its im­ple­men­ta­tion, it was clear that the new tax regime was not what it was claimed to be.

To start with, it had to be ac­cepted that a re­gres­sive flat or sin­gle tax on all com­modi­ties, whether conin­dia

FI­NANCE MIN­IS­TER Arun Jait­ley chairs the 27th GST Coun­cil meet­ing through video­con­fer­enc­ing in New Delhi on May 4.

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