With reference to the article, "GST: Remains of a decade" (September 16), I agree with the proposition of the author, Parthasarathi Shome, that there are severe defects namely, having separate rates of duty for goods and for services and the states being allowed a band of rates in the proposed scheme of goods and services tax (GST). I also agree that the tax compliance will not be so simplified. But I would say there will be substantial simplification in any case even with this defective system now proposed.
The simplifications will be the following: (a) The big fat Central Excise Tariff will go; (b) The highly complicated concept of manufacture will go;
(c) Classification controversies will go;
(d) Problem of identification of goods will go; (e) Undue enrichment theory will go;
(f) Entry tax will go; (g) There will be common exemption between Centre and states; (h) Zero rating will be more comprehensive and easier; (i) Common market will be achieved at least partially in the absence of central sales tax (CST);
(j) Even if there is a band of rates in the states, the manufacturers and traders generally deal with few items and sell to few states. So the problem will be less for an individual trader than what we imagine; (k) One per cent proposed levy is less than the present four per cent CST plus cess.
The system will not be perfect as an economist like Shome would envisage. But to a ground-level ex-officer like me, the above advantages will be very important in day-to-day operations.
The inequity that Shome has referred to between rich manufacturing states and the poorer consumer states is a reality but it is continuing from 1956. So we can forget about it for some time until we can correct it later.
I would definitely vote for introducing the present defective GST structure than waiting too long for the best to come. In reality, I know that the states will never agree to have one rate of duty all the way, in any case not in the foreseeable future. Sometimes the best is an enemy of the good.
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The simplifications will be the following: (a) The big fat Central Excise Tariff will go; (b) The highly complicated concept of manufacture will go;
(c) Classification controversies will go;
(d) Problem of identification of goods will go; (e) Undue enrichment theory will go;
(f) Entry tax will go; (g) There will be common exemption between Centre and states; (h) Zero rating will be more comprehensive and easier; (i) Common market will be achieved at least partially in the absence of central sales tax (CST);
(j) Even if there is a band of rates in the states, the manufacturers and traders generally deal with few items and sell to few states. So the problem will be less for an individual trader than what we imagine; (k) One per cent proposed levy is less than the present four per cent CST plus cess.
The system will not be perfect as an economist like Shome would envisage. But to a ground-level ex-officer like me, the above advantages will be very important in day-to-day operations.
The inequity that Shome has referred to between rich manufacturing states and the poorer consumer states is a reality but it is continuing from 1956. So we can forget about it for some time until we can correct it later.
I would definitely vote for introducing the present defective GST structure than waiting too long for the best to come. In reality, I know that the states will never agree to have one rate of duty all the way, in any case not in the foreseeable future. Sometimes the best is an enemy of the good.
Sukumar Mukhopadhyay, New Delhi
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201 · E-mail: letters@bsmail.in
All letters must have a postal address and telephone number