GST - still a long story to go!

The way Good & Services Tax (GST) story has moved forward, it only highlights the depth of differences, lack of clear & common objectives and the lack of trust amongst states and center.  



Too many complications in GST!

The Finance Ministers (FMs) of all the BJP ruled states boycotted the meeting of the empowered group of state FMs leading to a continued deadlock in negotiations. It is believed that the there are significant differences between the centre and states. The meeting was attended by only eight state finance ministers. 

GST is India’s most ambitious indirect tax reform, seeking to create a common national market by bringing down fiscal barriers between states. The constitution’s current provision on the demarcation of the taxation powers of the Centre and states has to be amended to implement GST, which needs a wide-ranging consensus among political parties. The Centre had asked states to come out with an alternative to their proposal after many states feared the loss of fiscal autonomy.

The more important point to note that GST implementation would not meet it's full purpose if their lack of uniform and cohesive GST structure. A complicated GST regime would do no good, instead, would create its own set of systemic issues. Success of GST would be dependent on key points - the rate of GST (it should be low & simple/straight-forward); and system/ process of GST collection.