Cong’s two voices on GST: State to set pace for new tax regime
FM says his dept will allay fears of traders, Punjab will become lucrative investment destination
CHANDIGARH: The stand of the Congress on the goods and services tax (GST) seems to be a study in contrast, depending on whether it is in power or opposition. While the party has decided to give the special midnight session of Parliament to roll out the new tax regime from July 1 a miss, the Punjab government will be “on the move” to support GST.
Saddled with high debt and a parched treasury, state finance minister Manpreet Badal sees GST as a game-changer for Punjab. “Initially, there will be a chaos. From next week, officers of the finance department, including I, will be travelling across the state to allay fears of traders and manufacturers who are protesting against the implementation of GST. It’s a fear of the unknown. We will try to make the rollout seamless and painless,” he said.
According to the FM, Punjab stands to gain on many counts. “Our value-added tax (VAT) was among the highest. It not only rendered us uncompetitive, but also hit compliance.
With GST, more traders are trying to get into the tax net. So both compliance and buoyancy will go up. Being a consumption state, Punjab also stands to gain as GST is a destination-based tax,” he explained.
Punjab has been promised 14% growth in revenue for five years, starting with 2015-16 as base year for this fiscal. It is expecting over 30% higher revenue in the first quarter of the GST rollout.
SLIDING ECONOMY
A tardy tax administration has seen Punjab’s economy remain predominantly unorganised, helping many stay out of the tax net. There are just 2.4 lakh dealers registered with the state excise and taxation department. Of them, the majority (2.05 lakh) have registered for GST.
“In the meeting of GST council — comprising state FMs and presided over by Union FM Arun Jaitley — we were among the top five GST-ready states,” he said.
In his budget speech, the finance minister had highlighted how growth of VAT receipts has been declining from 32% in 2010-11 to a meagre 3% in 2015-16. “Factoring in inflation, it’s negative growth of 2%.” This, despite a high VAT rate. Its petrol and diesel prices were higher than those in the neighbouring states. The Food Corporation of India and private players also had to shell out a purchase tax and infrastructure cess, in addition to VAT, on foodgrains.
For now, petroleum and liquor have been kept out of GST purview. The high revenue from liquor was one of the reasons for Punjab to partially circumvent the SC ban on sale of liquor on highways by bringing in a law.
The government’s main challenge will now be to bring on board hundreds of small and medium textile units and traders who have been protesting against 5% levy on the sector.
Meanwhile, in a statement, CM Capt Amarinder Singh said Punjab will gain ₹5,000 crore from the new tax regime in the first year. “Congress is not against the GST, but the manner of the event,” he said.