Indian
Parliament ushered in the much hyped “Goods and Service Tax” (GST) from the 1st
day of July 2017, after prolonged parleys and deliberations between the
Treasury benches and the Opposition. On a general perspective, it is a dynamic move for introducing, imposing uniform tax structure nationwide,
removing varied tax rates which were in vogue and practice in the states of the
Union since Independence. Only an in
depth analysis and acclimatization of traders to its interpretation, nuances and receptiveness of the general
public to its intricacies would go to speak about the pros and cons of this
novel attempt. It would be a boon if inflation
falls, and bane if it boomerangs and overshoots the roof, burning a hole in the
common man’s pocket. Time is the best judge and deciding factor.
The
new legislation has four tax rates (5%, 12%, 18% and 28%) wherein everything
that is manufactured, traded, sold and serviced have been classified and
brought under. The President of India,
The Prime Minister and his council of ministers are unanimous in espousing the
highlights of the Goods and Service Tax and the enormous benefits that would
flow to the citizens, through reduction of prices of essential commodities. It
is ironical that Congress, the main Opposition party, which propounded the
concept of introducing a single tax rate all over the country, boycotted the “
historical midnight session of Parliament “, much to the chagrin of the ruling
party and its allies.
What
would be the implications of Goods and Service Tax on the commoner – whether it will make them heave a sigh of relief through price control, falling
inflation, or make them groan in pain,
fume with anger and discontentment
spurred by the system’s lapses and shortcomings, is to be seen in the long run. It would be
too premature to judge the outcome.
Personally
I wouldn’t rate it as exemplary, like it is being advertised by the Government
in all media forms. There is lot of
ambiguity, apprehensions among varied industry, entrepreneurs, traders and the elusive factor is “clarity”,
on many facets of law.
It
is to be acknowledged that basic essentials have been left out of the tax
bracket, and the next rung of commodities suffer 5 % taxation. The
yardstick adopted for classifying the
goods under various brackets is not decipherable. It is rather intriguing. For
example – it is found that while detergent soaps attract lower tax, shampoos are placed in the higher slab rate,
figuring as a luxury item. I am left to wonder as to when, how this transition
took place and by whom it was done. Corn
flakes which have found a permanent place in the kitchen shelves of middle
class families for quite some years now, suffers heavy tax, whereas pizza cakes, macaroni, spaghetti and the
likes have been sparingly taxed. Packed groundnut cakes, sweets prepared by
village cottage industries have been pushed to the higher rate category. Likewise the contradictory list is quite
long. What is the rationale adopted for formulating such classification? Not
fathomable to me.
Some
category of industries have come to bear the brunt in full. Particularly the
matchbox, fireworks, wet grinders, entertainment etc., who have struck work from day one of
implementation. They require a soothing gesture from the Government.
A
disquieting factor is the consistent fall in interest rates on all category of
saving instruments, over the past few years. Every deposit renewal fetches
diminished rate of return on investments, placing the common man, more
particularly the senior citizens in dire straits. The gap between inflation and
income remains unbridgeable. Making ends meet is becoming a distant dream for
the man on the streets.
Encouraging
/ increasing public savings is a pivotal task of a welfare state. This
should be achieved by providing reasonable interest rate on
investments. Contrarily, the interest
on all types of savings, has consistently traversed the one way route
– “downward”. People will lose ( have
started losing ) interest in saving their hard earned money, in the future, if
the interest rates are not made attractive.
Let the ruling polity take the bold step to cut down on the perquisites,
benefits enjoyed by the Members of Parliament and Legislative Assemblies, do
away with unwanted subsidies and curtail other Governmental expenditures, which
will save humongous amount to the exchequer.
After all pruning should begin from the people’s “ Prathinithis “. (
representatives ).
Another
jolt that has been delivered on the masses is the steep increase in service tax
rate on the premium amount paid on
insurance policies. A totally unwarranted step, which would
have serious repercussions on the wellbeing of the
insurance sector in the long run.
Corrective measures have to be taken by the Government to enable the
industry to stay on a robust state, lest it may get plagued with ill health in
future. “ Jeevan Bhima Nigam “ should not cry out “ Jeevan Bachao “ over the years.
To
perorate, the Government should seriously introspect to plug the loopholes,
correct the mistakes, set right the shortfalls in Goods and Service Tax (GST)
rates, classification pattern and manner of implementation, for promoting
healthy economic growth, coupled with healthier public acceptance and
appreciation.
This
is an appeal from me, a CM ( Common Man ), to the PM ( Prime Minister ). Onus
is on the Government to act – “ fast “.
Time is of essence.
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