The biggest advantage of the Goods and Services Tax (GST) is its transparency and it would be very difficult for producers to completely evade, Mythili Bhusnurmath, Consulting Editor, ETNow, told the channel in an interview.
Just a week ago, the Prime Minister himself said 99 per cent of the goods and services must fall under the 18 per cent bracket and we are getting to look into the crystal ball, thanks to the finance ministers blog which outlines the vision 0 per cent, 5 per cent and a new standard rate which is going to be somewhere in between 12 per cent and 18 per cent, of course with the exception of luxury goods and sin items. Is this the right way to go as India rolls out its vision for One Country, One Tax?
Absolutely. I think this is exactly the way to go and it is good that the finance minister has outlined it especially because earlier we used to always wonder when elections were looming, would this be the vision of the government or all governments for future?
But the good thing about GST as you have mentioned is that the GST Council is the first truly federal institution. One can assume that this is the vision not just for the finance minister of this particular government, but of the country.
All finance ministers and all states have come together. So there is no reason to doubt that this is not going to happen and that will make a huge difference.
We are already seeing what the transformation the GST has made to the way business is conducted. Yes, it is not the perfect GST system, but it is a vast improvement from what we had in the past and it has a promise to get much much better in future as well. Given the momentous change, one really needs to pat not just the central government, but the entire country as a whole. All state governments have been truly participating equally in the business of the GST Council.
While we are seeing the GST Council consistently trying to lower rates in the interest of the economy and consumption at large, would you say the industry has been guilty of maybe not passing on the benefit as it should have. We, for example, have been seeing notices sent left, right and centre by the anti-profiteering authority?
Well yes, we did have the anti-profiteering authority issue notices, but ultimately competition is the answer for all such deviations because what is profit, what is excess profit. These are very difficult really to define in black and white, but competition will ensure that if one producer is not passing on the benefit and another is, then automatically consumers will go to the other producer.
So I do not think one needs to worry very much because the biggest advantage with GST is that there is transparency and it would be very difficult for producers to completely evade and not pass on the benefits. GST is a very welcome change that we have had in indirect tax system because indirect tax tends to be regressive. We are now going to move towards 0 per cent, 5 per cent and just a standard rate. I think it is a very very good move.