I am no economist but even as my limited understanding of finances go, I could not ignore the introduction of the mother of all taxes- G.S.T or the goods and services tax with the backdrop of the catchy marketing ploy of one nation, one tax, one market. Read and watched some of the finest minds in the country including Swaminathan Aiyar, Gurcharan Das, C Rangarajan, my dad & Pranoy Roy to present my take of where we are and what it entails…
To give a backdrop of the magnitude of the decision let’s rollback the clock and try to search for interesting decisions in the financial sphere that the country has seen.
Elders and knowledgeable folks agree that the opening of the Indian Economy is thanks to our then Finance Minister Dr. Manmohan Singh and his wonder budget in 1991 but what has been lost in time is during his tenure, we as a country pledged 46.91 tonnes of Gold to the Bank of England to raise a loan of $405 million because we were about to default on our loan payments and our credit worthiness was going to take a hit, our foreign reserves were grim and it was not sustainable for our imports especially petrol. It’s taken GST 17 years to see the light of the day and give it another twenty odd years and we might forget about it too? The answer is a big NO because GST is here to stay.
It has come into existence after deliberations between all the political parties, 29 states & seven union territories to “put out” an amalgamation of 17 taxes and 23 cesses under a unified tax structure. Given the complexity of the Indian economy and it’s population the Direct Taxes constitute 1/3rd and commodity taxes contribute 2/3rd the amount when convention says it should be the other way around. Rather than tax separately under different state and central taxes, GST has five slabs of 0%, 5%, 12%, 18% and 28% for different goods and services with the notable exclusions being petrol and alcohol which will not be taxed. Our Revenue Secretary to the Govt. of India was kind enough to point out that 24 lakh people in India fall under the category of earning 10 lakh($15,480) per annum or above which constitutes .002% of the population which clearly indicates that the tax collection has a lot of bottlenecks & was crying out for reforms.
Coincidences should’t be lost out in the larger scheme of things because GST was introduced in the Monsoon session of Parliament which obviously was a change of seasons so much so that GAP came out with three messages in a week proclaiming a “sail”. Surprise surprise! Don’t know where it will lead us in the long run but am willing to give Digital India, Make in India, Skill India a try. Won’t you?