Even the not-so-FAQs answered
Chennai, June 10: GST. What is the road ahead? We at Crank’s News are uniquely placed to answer this question — this is why we are experts and you are just lay leaders — because the road ahead of our office is literally GST (Grand Southern Trunk Road).
This crowded, confused, complex GST Road, as it is now, could be a good metaphor for the other GST (Goods and Services Tax) as no one seems to have any clue about it. Remember this is the same government that implemented the demonetisation, and a good six months into it we aren’t any clearer about how much money was collected. The Finance Minister says they are being still counted as if they are collections at Tirupati hundi.
Anyway, we also have no expertise in GST, but in the true traditions of serious media houses, we will ignore that minor part and get down to address the several questions on GST with true intellectual confidence.
Q: Before you tell us about GST, give us a brief background about the existing tax system.
Ans: Even though you may have been busy with your work, you may perhaps be aware that India is a vast country with many States and Union Territories. And most of the goods and services suffer almost as many different taxes and cesses as, well, the number of people in the various States and UTs.
Also, as things exist now taxation occurs at both the production point as well at the consumer level. For example, if you are into the manufacture of AC, your goods will be levied a tax at the factory gate — yes, the security guy usually moonlights as the tax commissioner and collects the tax then and there itself. And when the AC is purchased at an outlet, you will see on your bill the local taxes kicking in on an ad valorem basis (the Latin term ad valorem is ‘ad’ means ‘at the rate of’ while’ ‘valorem‘ means ‘total randomness’). These taxes are fixed by the State governments. Only in the case of Puducherry, the tax rates are decided either by the Chief Minister or the Lieutenant Governor, chosen after who wins a hand wrestling contest.
Q: What will GST do now?
Ans: The existing system of taxation, as you can see, is very confusing because it involves multiple taxations at multiple levels. The GST, on the other hand, is expected to simplify the whole thing by conveniently providing the same confusion at a single point itself. Or at least, that is what it looks we are in for.
Q: What gets taxed, and what rate?
Ans: The government says there are four basic rate slabs, which are 0%, 5%, 12%, 18%, 28%, making it pretty clear that the government doesn’t know basic addition as you can see there are technically five rate slabs. Remember, this is the agency that is going to implement the whole thing.
Essential items like food grains, milk, newspapers come under the 0% slab, while luxury items and stuff whose usage need to be curtailed, like NDTV, will figure under the top bracket.
The government also says that chewing tobacco will attract one of the special higher rates reserved for tobacco and luxury goods of 160 per cent. Also, one of the press release mentions a tax rate of 290 per cent on cigarettes and pipes. All these things make it clear again that the government is making these things up on the fly.
Q: What are the grounds for opposing GST?
Ans: The States are worried that they will lose their fiscal autonomy as they will no longer be in a position to impose their taxes, but the Central government has assured them that they will be compensated adequately especially during Deepavali and Pongal time with extra baksheesh.
Q: Why did it take so long for the GST to be rolled out as the original plan was unveiled during the UPA regime itself?
Ans: Indeed the whole thing has been time-consuming as it is about constitutional amendment which many of you may be aware involves carefully tearing the old proposal from the original copy of the Constitution stored in a government vault and then slowly but neatly pasting the new proposal using high-quality adhesive. The President had to put his signature on the new page along with the attestation of the one man who is the ultimate in signing matters in India: the Notary public.
Q: What are the ways by which the government is trying to clear the confusion of the general public on GST?
Ans: Before moving to the GST regime, the government has released plenty of FAQs (which though not as comprehensive as the one you are reading now, is pretty adequate) and it has also come up with a handy app for the same. As of now, the app is available only in Android version. So, before you migrate to GST regime, you have to quickly migrate from Apple iOS to Android regime. That is as good a reason as any to welcome GST.