Has the GST Implementation Been a Wise Decision?

Introduction

The implementation of the Goods and Services Tax (GST) has been hailed as a significant milestone in the evolution of India's taxation system. India, among 70 countries, has implemented one of the best Value Added Tax (VAT) laws. Since its inception, GST has shown resilience in tax collections and has been praised for its low inflationary impact. However, challenges remain, and questions about the effectiveness in controlling tax evasion and fraud persist.

The Impact and Benefits of GST

One of the primary benefits of GST is its positive impact on price stability, as evidenced by moderate prices and discount sales post-implementation. Moreover, the removal of tax checkpoints has led to a significant reduction in logistics costs, ensuing a substantial decrease in corruption. This has further facilitated customer-driven economies and curtailed the previous regime's support for elite businessmen too often favored by the Congress/UPA.

Challenges and Criticisms

While the GST has been a significant step towards tax governance reform, it has not been without its challenges. Many critics argue that the implementation process had faced hurdles, attributing these to a flawed approach by earlier financial ministers, such as Arun Jaitley. His initial haste to implement the GST led to considerable confusion, particularly for small businesses, ultimately necessitating numerous revisions and clarifications.

A major concern is the ability of the Department of GST to control tax evasion and fraud. Leaving even a minor loophole can result in the theft of hundreds of crores of public money. While many small businesses hope that GST will offer them relief from tax officials' harassment and extortion, the system of online filing can be a stumbling block, especially for rural areas where digital infrastructure is underdeveloped.

The Need for Reform and Transparency

Legislators must address several issues to effectively manage the implementation of GST. First, efforts should be made to address any remaining ambiguities and confusion in the tax laws. Second, there is a need to tighten controls on tax officials, many of whom are corrupt and abuse their positions. This includes a stricter accountability framework and fairer treatment of small businesses.

Moreover, while the rate of 28% on all goods and services was proposed by the Congress/UPA, this was not transparently revealed in their manifestos. This sort of behavior in governance is detrimental and should be avoided in the future.

Conclusion

The GST has proven to be a wise decision for India's tax landscape, but continuous efforts are needed to ensure its full benefits are realized. Addressing the challenges of implementation, enhancing transparency, and ensuring accountability are crucial steps to mitigate tax evasion and fraud, thereby making the GST a sustainable and beneficial tax system for all.

As the country progresses, it is essential to maintain a vigilant and transparent approach towards tax governance. The current government must ensure that any small business concerns are adequately addressed, and the infrastructure necessary for seamless online filings is diligently developed.