Course correction?(GST in India)

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 Course correction?(GST in India)

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• GST Council under attack : The way the new indirect tax regime is evolving, the GST Council was forced to announce a slew of measures to reassure various stakeholders in the system.
• Measures announced by GST Council :

1. Peak rate of 28% on cinema tickets above Rs.100, and premium electronic goods etc. was reduced to 18%
2. More time given to businesses to cope with compliance issues (annual returns etc.)
3. Another promise of a simpler filing system (by July 2019)!
4. Single, fungible e-cash ledger proposed to replace today's problematic system where credits against Central GST cannot be set off against State GST dues
5. Concerns by States on revenue trends were taken cognizance of

• Accommodative gesture : The Council has shown it, and its chief Arun Jaitley, who recently had suggested that compensation payable to States actually reduced. Is the present stance due to election results?
• A complex GST : Everyone knew that it was a very complex structure put in place, and traders needed simpler filing and faster refunds to ease cash flows. 
• Sin category unclear : Earlier, 200 items were in "sin goods" category of 28%, and it's only 28 now. Strangely, it includes cement! 
• Not enough thinking : The first list was hastily prepared - disabled persons' carriage parts was in 28% category. (now 5%)
• Cement and Auto Parts : Since they yield Rs.13,000 cr and Rs.20,000 cr in GST, no changes are done yet.
• Revenue and optics dominating the GST Council's work : It is clear that instead of the nature of goods and services to be logically taxed, it is revenue quantum and optics that are determining decisions.
• The right way : No one should get the sense that as elections approach, lobbying pressure can help get rates tweaked. Nor should frequent changes be ever made. That won't ever make India a predictable, simple, stable tax regime.
• Summary : So far, given the frequent changes to rates and slabs, the GST Council seems falling short in making the taxation system simple, predictable and stable.

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