The Congress Party welcomes the changes in GST rates post the recent GST Council meeting. Better late than never Modi Government has at last seen sense, in the consistent stance of the Congress Party.
Right from the day one, when the ruling dispensation thought that “Freedom at Midnight” meant ability to take potshots at the Congress party, and without giving adequate value to consultative process, the GST regime was ushered in a hurry, without adequate preparation either in terms of conceptual clarity or humility in stake-holder consultations and more importantly without strong technological preparedness. As a result, no sooner the GST was ushered all hell broke loose, forcing the Congress party to term this “draconian” and “Gabbar Singh Tax”. The ruling party soon realized that what they thought was ‘Freedom at Midnight’ was in fact the greatest nightmare.
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The 31st meeting of the Council held on December 22, 2018 was held in the backdrop of the disastrous failure of the GST on all accounts: huge revenue deficits of more than 1.5 Lakh Crore per annum for the country as a whole, frequent postponement of key GST Returns due to inherent complexities, tax rate distortions resulting in harassment of the tax payers and large scale evasion because the tax payers continuing to find the compliances draconian. Far from much touted incremental buoyancy of 2% in GDP, the growth rate actually decreased.
The Congress Party has always had its ears to the ground, listening to the multiple stake-holders in the MSME and Traders segments and the constant problems they have been subjected to either due to high Tax or due to the multiple returns increasing the costs as well as complexities of compliance. Instead of ensuring a “Good and Simple Tax” as proposed by the UPA-2, the constant one-upmanship of the ruling dispensation almost ended in ruining multiple businesses.
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A large number of our suggestions, which now form a part of published minutes of the GSTC, were brushed aside by the Government in the earlier meetings. It was only later, as the Gujarat elections approached, that the BJP accepted most of these suggestions. Similar is the case with the recent changes. It is seen that with 3 large states in the Hindi Heartland having seen reversals in the recent polls, the BJP has started feeling that the GST was indeed “Gabbar Singh Tax” and the same needs to be changed immediately. Every decision is a ‘Knee-Jerk” reaction, whereas the Congress party has been consistent due to its ability to understand, not only the pulse of the nation but also the challenges faced by the multiple businesses.
Despite suggestions being made individually by the Congress amidst stiff opposition by ruling dispensation, the credit was not claimed publicly to maintain the sanctity and bonhomie of the Council and the meetings.
As a result of continuous pressure by the Congress party many concessions were made from time to time, like rationalization of tax structure on textiles, raising the composition limit for MSMEs by including a portion as services, simplification of GST Returns and reduction in tax rates on items of mass consumption.
Congress continued to advocate for a comprehensive GST to bring petroleum and electricity into its ambit so that even their prices could be moderated and thus provide the required relief to the masses.
Rather than fixing the design and operational flaws of the GST, BJP tried another patchwork this time to throw an easy bait as a last ditch effort to please the voters. Some of the agenda points were precisely the points Congress was making from the day one.
• Nearly 80% of the taxpayers make a token contribution to GST. There is no need to subject them to elaborate compliance procedures.
• We strongly believe that pre-GST exemptions to nearly three million intermediaries who work, as distributors or job workers and many others make no effective contribution to the tax revenues should be exempted per se.
• We stated at the very first meeting that I had attended in Kashmir that we have in Punjab a huge problem of job workers in Cycle industry who should be kept outside the tax chain if the principal manufacturer pays tax on the cycle. However, all these suggestions have fallen on deaf ears.
At the 31st meeting many agenda items were given when the Council members entered the meeting hall. Some were given on the previous evening, which had large-scale implications on the tax revenues. Despite clearly written rules, the ruling dispensation failed to provide us the tax implications of the various tax reductions. With such perfunctory information, the Council members would have failed in their basic duty if they had gone ahead without understanding the implications of their actions on the economy as a whole and further widening of the tax distortions.
Despite such state of affairs, practically the entire agenda of the meeting was endorsed by the opposition in a spirit of good faith and bonhomie, while merely suggesting postponing those agenda items, which were circulated in violation of the laid down procedures. In fact the Chairman the Council himself suggested detailed examination of these agenda points in GOMs.