Poor implementation of GST has destroyed economy, major overhaul needed.

Holding the NDA Government’s poor implementation of the Goods and Services Tax (GST) in the country responsible for the destruction of the economy, especially the small and medium sector, the Congress on Monday called for a major overhaul in the GST structure.Addressing a press conference here, Finance Ministers of Congress ruled states – Punjab Finance Minister Manpreet Singh Badal, Karnataka Finance Minister Krishna Gowda and Puducherry Minister Kamala Kannan- said that the GST, which was believed to be one of the biggest reforms since independence and was launched at an unprecedented midnight session of the Parliament, has turned out to be a big disappointment.

‘GST promised GDP rise of up to 2 per cent per annum primarily on the back of simple and clear tax laws; Low tax rates and lower prices to encourage higher consumption; Liberal tax credits and removal of cascading that worked to the disadvantage of Indian businesses by benefitting imports and discouraged exports and reduced cost of logistics and simplified compliance.However, GST has disappointed on all the above parameters, and in some areas turned the clock by a few decades. It is surely a case of poor implementation on all fronts: concept, design, tax rates, exemptions, compliance requirement and technological preparedness. The poor implementation of the GST has led to the destruction of the small and medium sector. It has led to a shock in the Indian economy. Today, the Indian economy has reached a dead end,’ Mr Badal told reporters here.’The need of the hour is to improve the structure of the GST,’ Mr Badal and Mr Gowda said and said that they would take up the issue strongly in the next meeting of the GST council to be held in Guwahati on November 10.

Blaming the implementation of the GST for resurrecting the inspector Raj in the country, Mr Gowda said,’the often-quoted adage about tax collection is that tax should be collected in a manner a bee gather honey from a flower. The GST as implemented has taken the situation to the other extreme. It almost appears on attempt to resurrect inspector-raj after decades of liberalization. A taxpayer is required to file 37 returns in a month in each of the States and UTs in which he has business. Thus a person present in all States and UTs will file 37 x 36 or 1332 returns a year. There were a mere two returns in Service Tax earlier for a taxpayer operating all over the country. It is impossible to imagine filing a return without the assistance of a tax professional, most of whom themselves are struggling.

The requirement of matching of nearly 350 crore invoices every month with a possible 20 per cent mismatch will require additional working capital of close to Rs. 1 lakh crore. No other country in the world has done this kind of matching. The results are there for all to see. Tax collections are nowhere close to expectations. It is obvious that taxpayers are shying from coming into the tax net fearing the might of the government agencies. With most States falling short of the expected targets and obtaining compensation, the pressure on government finances is severe, creating legitimate doubts about its capacity to manage fiscal deficit and usher a growth-oriented GST. Already an amount close to Rs 8,000 cr is being collected per month for compensation that means that much of additional taxation in the system. There is no clarity from where will Centre manage its shortfall and whether this will result in raising other taxes,’Mr Gowda said.’The feeling one gets is that the entire GST has been introduced in undue haste causing huge damage both to government revenues and economic activity. Nowhere this appears more evident than in the working of GSTN where basic preparedness for the much ambitious IT platform has been abysmal. The indefinite postponements to the return for the first month of July show the extent of complexity in law and ill preparedness. GST has thus turned out to be the biggest destroyer of the Indian economy for which successive generations will pay a price beyond redemption. It requires an urgent and holistic fix. Nothing less will do,’ Mr Badal said.

Source: http://www.uniindia.com/news/india/poor-implementation-of-gst-has-destroyed-economy-major-overhaul-needed-cong/1039013.html#TGJ6xW4ZUzSy3tRw.99

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