The GST debate

The dispute among the state finance ministers over the threshold level above which the Goods and Services Tax (GST) should be applicable will hopefully be resolved. The chief economic adviser to the government, Arvind Subramanian, is also expected to give his recommendations on the rate of GST.

Both these issues are still a matter of controversy even as Parliament convenes for the Winter Session next week. It is expected that the bill to amend the Constitution to enable the GST will be passed this session. The GST is vital for the simplification of the tax system and will eliminate corruption to a large extent. It is ironical that the states are disputing whether the threshold level should be Rs 25 lakh or Rs 10 lakh. The states supporting the Rs 25-lakh level say Rs 10 lakh would put the small and medium industries and traders at the mercy of inspector raj. There is merit in this; but those wanting the threshold at `10 lakh feel that it will add to their tax kitty. Perhaps the latter need to be convinced they will g

et enough revenue if tax collection is efficient and transparent. In the case of the GST rate the Congress is adamant it should be 18 per cent against the government’s 20 per cent. Much depends, as the Congress says, on how the government handles this. Union finance minister Arun Jaitley is yet to officially invite Opposition leaders to discuss the matter. He will have to win over the Opposition, otherwise the government will carry the blame for any delay in the implementation of the GST.