Enhancing the GST's efficacy

16 DEC,2019 | MEDC


 

GST, along with the current slowdown, has sparked a fiscal crisis requiring careful management. Although revenue is likely to fall considerably short of expectations, raising the rates of indirect taxes now could have a counterproductive effect. While many welcomed the flawed GST at the time of its introduction, that approval was subject to an improvement of the tax as time went by. For several businesses (particularly those in the MSME sector), that does not seem to have happened. The GST Council needs to recognize that the economic logic behind GST is that it would make paying taxes so convenient that evasion automatically reduces. That necessitates the development of a simple, clear and transparent tax system, ideally with just one rate. GST is not just anotherfiscal reform but a sincere attempt at business reengineering, and it needs to be seen in that light.

*Photo Credit: Google

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