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Happy Birthday GST

July 5, 2018

  The youngest kid in the taxation clan indeed had a long gestation before it finally made its first cry on July 01, 2017. To know how long G...

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Happy Birthday GST


 
The youngest kid in the taxation clan indeed had a long gestation before it finally made its first cry on
July 01, 2017. To know how long GST (Goods and Services Tax) had been resting in the gestation,
we’ll have to turn time back to the year 1999 when it was first conceptualised by Prime Minister Atal
Bihari Vajpayee boosted by his economic advisory panel.

Next year (2000) a committee was formalized to create the GST framework to understand how a
uniform tax system can be implemented in India. Then finance minister Yashwant Sinha initiated an
advisory panel backed by noted economists that could advise the finance ministry with respect to
GST.

In 2004, Dr. Manmohan Singh (then Prime Minister) acted as a catalyst to the GST project. He
formed a committee in year 2007 to give form to the GST Bill.
Since then, there was a lot of turmoil and apprehensions surrounding GST. Views from industry
experts were taken into consideration, a lot of main leads resigned and there was no political
consensus. The problems needed a solution and it came in the form of West Bengal finance minister
Amit Mitra who was asked by Arun Jaitley to replace K.M Mani. Mitra did a tremendous job with
respect to unifying the states to combat the issue of absence of political consensus.

Following the roller coaster ride that it had been for GST, the cake was cut with all grandeur at
midnight in the Central Hall of the Parliament amidst all the influential political leaders. However,
GST was born as a weak child that needed nourishment, due diligence and care. GST wasn’t capable
of handling the voluminous transactions; it suffered from severe IT arrest and the DEAD-line for
filing returns were pushed forward till most taxpayers understood the nature of GST.

Albeit the limitations, GST had very ‘protective parents’. The Centre and the States worked
efficiently together to fight all illnesses that surrounded GST with utmost dedication. All the relatives
(industries) had anxieties about GST’s mood (rate of 0 to 28%) with a cess on demerit goods. But a
sign of relief came when most goods were brought down from the 28% category tax slab. Moreover,
GST has been happily accepted by its social environment. The entry of over 45 Lac entities in the
country’s tax net has also helped in increasing direct tax collections. The SMEs (small and medium
enterprises) seem happy too about GST; with low manpower, it was a herculean task for them to visit
VAT, Excise, Service Tax, etc offices in the pre GST regime. Now they are efficiently focussing on
running their business rather than running from office to office.

Just about a month before GST’s first birthday, the collections grew to INR 95,610 crore in May from
INR 94,016 crore in April. The Sharma ji ka beta (Finance Secretary – Hasmukh Adhia) is still not
satisfied and has cautioned that the collections are still below INR 1,00,000 crore. Arun Jaitley on the
other hand is happy that tax collections for Personal Income Tax had grown by 44% year on year for
the April-June 2018 period along with corresponding rise for corporate income tax stood at 17%.
All in all it has been a splendid of a journey for apna GST. While many more reforms, additions and
subtractions will come its way, future does seem bright for this newbie in town.

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Updated on: 23-08-2016