The nation is just about winding down its first-anniversary ‘celebrations’ of the Goods and Services Tax (GST). PM Narendra Modi inaugurated the new regime on July 1 last year, hoping to simplify the maze of indirect taxes into one comprehensive levy. The results are far from what was expected.
To become GST-compliant, businesses have gone through a torturous process, and in most cases, the consumer has found the new regime to be more of a burden. The main demand today is that multiple slabs should be reduced and the highest slab should be done away with. Now, there are five slabs—zero, 5, 12, 18 and 28 per cent. While it is true that ‘milk and Mercedes’ cannot be taxed at the same rate, as pointed out by the PM, there is definitely a case for reducing the number of slabs to just three.
Former Chief Economic Advisor Arvind Subramanian has said the government is actively considering getting rid of the top ‘luxury’ slab of 28 per cent. This would be certainly welcome. Then there are key areas like real estate, alcohol and electricity that are not covered by GST, which is creating confusion among both consumers and the government. The complex compliance system of multiple filings—three a month and an annual return too, as well as complex forms like GSTR 1 and GSTR 2—has made GST compliance a nightmare.
In these difficult times, it is indeed welcome that the GST Council has cut rates on 211 items, 178 of which have been lowered from the 28 per cent slab to 18 per cent. Some of them, like women hygiene products, should have been shifted long ago. The government needs to ensure that the GST cut actually reaches the people. For instance, consumer product companies are warning that sanitary pad prices are unlikely to change. The government should also shed its discriminatory attitude towards what it calls luxury products. Items such as cement, paints and washing machines, retained in the 28 per cent slab, are hardly luxuries and should be shifted to other categories.