Rationalizing GST

27 JAN,2020 | MEDC


 

Our GST tangle can partly be explained by the complex federal bargaining that preceded the launch of the new tax. The principle of unanimity during those negotiations ensured that every state had the power to hold out till it got its way. That had the result of India getting one of the most complex GST structures in the world. The high frequency of tax changes means that the system is still not stable. The business community can never be sure of what the next meeting of the GST Council will come up with. That is not the best way to transition to a more effective national value added tax. Also, some important sectors continue to remain outside the purview of the GST due to the influence of powerful lobbies. A fair amount of rationalization of the GST remains to be undertaken, and it is to be hoped that it will be sincerely attempted by the finance minister in the forthcoming budget.

 

*Photo Credit: Google

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