The government should Cede some ground on GST

The government has realised that arbitrary policymaking without taking the stakeholders into confidence may ultimately lead to disillusionment of the people
Finance Minister Nirmala Sitharaman chairs the GST Council meet.
Finance Minister Nirmala Sitharaman chairs the GST Council meet.(Photo | PTI)

The Modi government, in its new stint, seems to have changed tack. The government has realised that arbitrary policymaking without taking the stakeholders into confidence may ultimately lead to disillusionment of the people. This was visible in the way the Finance Minister Nirmala Sitharaman reached out to GST taxpayers during her post-GST Council Meeting press briefing on Saturday. She took the opportunity to hold out an olive branch to businesses saying the government has no intention of making life difficult for them.

She sounded out that the government is not there to send GST notices to businesses left, right and centre. The Council’s decisions also reflected the same tone and tenor. The GST Council, which had its 53rd meeting, did look to address many common issues raised by taxpayers. Many decisions were more in favour of taxpayers than for revenue enhancement. Though some key thorny issues were left untouched, it would be interesting to see how the new-look Council with 11 fresh members addresses larger issues like rate rationalisation and inclusion of petrol and diesel under the GST regime.

GST collections have been robust with monthly revenue showing 10-12% increase year-on-year. In April 2024, monthly collections crossed Rs 2 lakh crore for the first time in almost seven years. While the surge in GST collection is partly attributed to increased economic activities in the country, a large part of it is said to have been due to strict rules to ensure compliance.  The government has tightened screws on tax evaders, fake claimants of input tax credit and fraudulent assessees.

These measures have led to robust collections but the field officers of the GST department have been a bit overzealous leading to harassment of taxpayers. Cases of forced tax payments and unnecessary raids and notices have become commonplace under GST. While FM Sitharaman has said only 1.96% registered taxpayers have received notices by the Central GST department, she added that state GST officials should be judicious in using coercive measures to ‘extort’ GST from taxpayers.

The 2024 Parliament election results were an indication that people voted out of anger and angst. Business owners as well as common people felt the burden of an overzealous government going the extra mile to fill government coffers. It is expected that parties in power in states would also take lessons from the general election results and curb their high-handed policies.

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