Modi government's sheer incompetence converted a possible ‘good fortune’
8 Oct. 2017
a press release issued on saturday Shri Randeep Singh Surjewala, Media
Incharge, AICC said, Entire spirit, direction and purpose of the GST Bill
introduced by Congress-UPA was – ‘Single, Transparent and Uncomplicated
Taxation on Goods and Services’ & ‘Reduction of Prices’. This mammoth
opportunity is being lost due to sheer incompetence of a panic stricken
Modi government driven by adhocism and lost in chaos of its own making.
Post-Demonetization disaster, a possible ‘good fortune’ of adding 2% to
India’s GDP is being converted into ‘misfortune’ by sheer ineptitude and
amateurish handling of the most important tax-reform.
In classical BJP style of ‘we know it all’, they first refused to
acknowledge the clutter, confusion and cost to economy by botching up the
GST conception and implementation. Reality dawned with the massive
economic downslide. While we welcome the interim relief to certain
sections, government has utterly failed to address structural issues of
GST reform through fair and transparent consultations.
Mockery of GST – Messing up the Architecture & Multiple Tax Slabs:--
1. ‘One Nation, One Tax’ has become ‘One Nation, Seven Taxes’ or
more, i.e. 0.25%, 3%, 5%, 12%, 18%, 28% and 40%. Indian GST Rate is now
the highest in the entire world. Even the Chief Economic Advisor to this
government had recommended the GST rate of 15% to 15.25% as the revenue
neutral rate. In addition, States have the discretion to impose more taxes
over and above the GST. A case in point being the entertainment tax
imposed by Tamil Nadu and registration tax imposed by Maharashtra. PM and
FM have failed to address this principal structural flaw. A single GST
would have meant a Standard Rate as well as Standard Plus Rate (on demerit
goods) and a Standard Minus Rate (on merit goods). A Congress government
would have worked towards this module, besides capping the GST at 18%.
2. Prime Minister/ Finance Minister and Government have still not laid
down any road map nor given any indication of bringing Petro Products,
Electricity and Real Estate within the ambit of GST, repeatedly
emphasized by Congress Party and all the experts. It may be worth noting
that GoI continues to earn a bonanza tax of Rs.2,73,000 crore annually
from cumbersome petro taxes alone.
3. ‘Adjournment’ & ‘Deferment’, rather than ‘Decision’, appear to be
the ‘way forward’ for this government. Implementation of TDS (Tax
Deduction at Source) and TCS (Tax Collection at Source) has been postponed
till 31.03.2018. Reverse Charge Mechanism (RCM) requiring the purchaser to
deposit GST on affecting purchase from a GST unregistered
individual/entity has also been postponed till 31.03.2018. ‘E-Way Bill’
concept has been deferred to 01.04.2018 as the architecture and technology
is still under conception. As tax refund system virtually collapsed with
outstanding tax refund demand of Rs.65,000 crore in July, 2017 alone and
exporters in peril, export exemption has been extended/postponed to
31.03.2018 until the conception and implementation of an ‘E-Wallet
System’. All these are soft promises being made today with the ‘Damocles
Sword’ continuing to hang in absence of a clear decision.
4. Even the enhancement of annual aggregate turnover for ‘Composition
Scheme’ from Rs.75 lakh to Rs.1 crore is far from satisfactory to
bring the requisite relief to small & medium businesses. Pre-GST turnover
limit under Central excise was Rs.1.5 crore as fixed in the year 2006.
Inflation adjusted, the limit would be at least Rs.3 crore. Also, this
limit was for goods alone, while GST includes both goods and services.
This would put a large number of ‘small scale industries’ within the ambit
of GST making the compliance much more cumbersome and difficult.
Agriculture Taxed – Anti-Farmer BJP exposed.- Reeling under the lack of
market driven MSP and cycle of indebtedness, no relief has been given to
the farmer and agriculture sector from burden of taxes. Fertilizers, which
attracted 1.03% of Central excise earlier, are now being taxed under GST
at 5%. Tractor and all other agricultural implements have been taxed at
12% with tyres, tubes and transmission parts being taxed at 28%. Despite
the reduction, pumps meant for drawing water, including submersible pumps,
deep tube wells and diesel engines, are still taxed at 18%. Pesticides,
essential pre-requisite for agriculture, are taxed at 18%. Even the cold
storages and food grain handling systems are being taxed at 18%. Non-grant
of any relief to this sector, which is the biggest employment generator,
reflects inherent prejudice of Modi government.
Textiles, second biggest still plagued by Duty Distortion--Textiles,
second biggest employment generator after agriculture, continues to face
deep stress owing to distorted duty structure threatening to wipe out the
living subsistence of millions, of traders, cloth merchants, micro, small
and medium businesses. After a nationwide protest, duty on manmade fiber
has been reduced from 18% to 12% yesterday. What Modi government does not
realize is that while the fiber is taxed at 12%, the end-product, i.e.
fabric, attracts a tax of 5%. This is threatening the livelihood and
profitability of non-integrated textile players of manmade fiber (70% of
total), while helping the big fish in textiles sector to make huge
profits. What is deeply shocking is that while Indian fabrics
manufacturers will pay such high taxes, import of fabrics from countries
like China, Bangladesh, Sri Lanka etc. is permitted at 5% only, which will
further erode the viability of India’s textiles sector.
Massive Taxation on goods of mass consumption continues unabated No relief
has been given to the common man. Modi government’s circumspect motives in
taxing all aspects of ‘Roti, Kapda and Makaan’ continue unabated. A sample
list is placed below:-
Items Tax under GST Shampoos, Deodrants 28% ACs/TV/Washing Machines 28%
Furnitures 28% Computer/Multi-functional Printers 28% Movie tickets above
Rs.100/- 28% EMI on Vehicles 28% Chess Board/Yoga Mat 28% Food & Beverages
18% Payments through Credit Cards & all Banking services 18% Insurance
Premium & Financial Services, Telephone 18% Helmets 18% Coaching Classes,
Educational Institutes18% Tour & Travel 18% IceCream/HairOil/Toothpaste/Soap/Soups/Corn
Flakes 18% Photo-voltaic Cell 18% Dialysis/Blood Test/X Ray/Ultrasound etc
12% to 18% Tea/Coffee/Butter/Biscuit/Curd/Sweets/Juices 12% to 28%
Sanitary Napkins/Tampons for Women 12% Overall, a vision less government
drunk with arrogance is wasting a golden opportunity of putting India on a