Co-founder of Apple and pioneer of microcomputer revolution Steve Jobs once said that “sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving”. Acknowledging the error of judgment is essential for a genuine course correction at times than crude politics. It is heartening that the Union Government is stepping up its bid to address concerns about the fledgling goods and services tax to provide a “good and simple” tax regime.
The premature delivery of the GST four months ago required a surgery to make the new tax regime people-friendly. The GST Council has now brought some items of common use such as chocolates, shaving creams, shampoos, beauty
products, granite and marble to lower slabs. As a consequence, the prices of some items of common consumption will drop which may please some. These concessions are estimated to make a dent of 20,000 crore annually in GST collections. Ironically, the burden of the revenue shortfall will also be borne by the same consumer.
When GST regime was announced and implemented, many people did not take it kindly because the outcome appeared contrary to the lofty expectations as they wanted a simple taxation system with one or two rate slabs, minimal paper work and elimination of the inspector raj. Already, Revenue Secretary Hasmukh Adhia has admitted recently that differential treatment to some similar items may not necessarily be fair and the rates may be revised. With Adhia agreeing that the GST regime will take a year to stabilize and the government doing a course correction, we may not be far away from having the palpable shape of one-nation, one-tax plan. The commitment to correct course is welcome. But the real question is the timing and sequencing of changes.
The good news is that the GST has brought 27 lakh new registered entities into formal tax coverage in its first three months alone. The revenue collections from the first month of its launch itself when taxpayers brought in 95,000 crore shows its success as far as gain to the exchequer is concerned. It is significantly higher than the 91,000 crore indirect tax target for the Centre and the States on an overall basis. With many more taxpayers registering in subsequent months, the GST appears to have begun well. However, the GST Council needs to take up more rate revisions to rationalize multiple GST rates, simplify tax system by removing glitches in the network and bring real estate in the GST regime as indicated by Finance Minister Arun Jaitley.