Some positives on GST progress

The encouraging news on GST readiness continues to pour in. The latest is on the training of the field officers who have a critical role to play in the actual implementation of the GST. The target set for the National academy of customs, excise and narcotics (NACEN) is 60,000 field officials. It is heartening to note that more than 44,000 field officials have already been trained by mid of Dec 2016. These field officials will be distributed between the centre and states.

Taking a cue from the “train the trainers” programmes that are quite popular in the skill up events, NACEN has done a good job by getting more than 2000 trainers ready. This figure is beyond the targeted figure of 1600. Besides this, there are 300 master trainers as well as 36 officers from the office of the Comptroller and Auditor General (CAG) who have received the necessary training. The training framework plays an important role in the implementation of any new system and the figures above show that adequate preparation is being targeted and achieved.

The GST Network, on which the entire software being developed by Infosys will run, also needs relevant staff to operate it. Here also the CBEC officials have been deputed to carry out the action.

Though there is a lot of hype created by some states that GST and demonetization cannot go together as they cannot absorb the dual impact of revenue loss. They feel that the demonetization has impacted the small businesses the most and they may not be able to align to GST so quickly. However, the argument seems to be baseless. The small businesses with a turnover below 20 lakhs (10 lakhs in the case of NE states) are likely to be exempted from the purview of GST. For those between 20 to 50 lakhs would have the option to pay at a flat rate in the form of composition tax. The agricultural output is also likely to be exempted from GST. Thus, it is clear that the small businesses are not impacted by GST.

The base year for calculating the GST revenue loss for the states has been taken as 2015-16 which happens to be prior to demonetization. The centre has already accepted to compensate the states at the rate of 100 per cent for the revenue loss for the next five years. This insulates the states from any loss in revenue.

On top of it, both demonetization and GST actually are very important tools to curb black money. Demonetization is likely to strengthen the banking channels by bringing the larger part of the economy under them. Similarly, GST is likely to bring the business transactions online through the GST Network and improve the tracking. Thus both GST and demonetization are complementing each other in making the financial transactions traceable and targeting black money.

The GST is the much-awaited tax reform that is going to integrate India into one large market. The tax system would be simple and transparent as most of the taxes would be subsumed. The government’s resolve to pass on benefit accrued to the businesses on account of GST, to the people by way of the proposed anti-profiteering bill is also a major positive.

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