One Year Later: Taking Stock of GST

This reading list is a curation of articles from 2010 onwards that examined  the early discussions about GST, its implications and implementation.

 

The Goods and Services Tax (GST) has been in place for year on the 1st of July. As the government prepares a mega event on the date to celebrate the roll-out and media outlets weigh in on its efficacy, read more about the early discussions about GST, its implications and implementation.

1) How Has GST Impacted Small Businesses?

Reforms must bring simplicity and not disruption. Goods and services tax was an opportunity for India to reform its cobweb like indirect taxation structure and reboot the system afresh. Unfortunately, the ground realities suggest otherwise. The way GST has been introduced is too onerous for small businesses. This may further thwart their growth. This article focuses on a few critical provisions of the GST and their possible impact on small businesses.

2) Will GST Exacerbate Regional Divergence?

This article analyses the extent of regional disparities in income per capita in India, considering both disparities amongst and within major states. It concludes with a cautionary note on the goods and services tax, which, contrary to the optimists, is likely to further exacerbate, rather than ameliorate, regional income disparities, marking the need for a turn to “place-based” economic policies.

3) Will GST Curb the Fiscal Autonomy of State Governments Significantly?

This paper argues that the proposed Goods and Services Tax would aggravate the already high degree of inequality in the country, and would inevitably curb the fiscal autonomy of state governments significantly. Contrary to the government’s claims, the implementation of the GST would not automatically enhance growth rate, reduce inflation or improve tax compliance. The calculations of the revenue neutral rates depend on various assumptions. Different states should be allowed to set their own state–GST rates with provisions for an entry tax. More emphasis should be put on direct taxes rather than the GST for improving India’s abysmally low tax to gross domestic product ratio.

4) How Can Effective Price Monitoring be Instituted in India Under a GST regime?

This article delves into the impact of the tax on prices of goods and services.The Central Goods and Services Tax Act, 2017 has an “anti-profiteering” clause aimed at ensuring that businesses pass on tax rate cuts and cost savings resulting from the adoption of GST to the consumers. In this context, Australia’s experience with price monitoring and control during the GST transition period is looked at to draw lessons for India. It is eminently possible to institute a comprehensive and effective price monitoring and control mechanism in India to enable benefits to consumers under the GST regime. However, the anti-profiteering rules in their present form have some lacunae and may not produce the desired results of containing profits and, thereby, price rise.

Read More:

  1. Goods and Services Tax: Some Progress towards Clarity | M Govinda Rao

  2. Goods and Services Tax in India:An Assessment of the Base | Pinaki Chakraborty, R Kavita Rao

  3. Issues in the Introduction of Goods and Services Tax | Mahesh C Purohit

  4. Goods and Services Tax: A Gorilla, Chimpanzee or a Genus Like 'Primates'? | M Govinda Rao

  5. Administering Goods and Services Tax in India | Praveen Kishore

  6. Macroeconomic Aspects of Goods and Services Tax | Arun Kumar

  7. What Ails the Implementation of the Goods and Services Tax? | P S S Kailash Nath, V Bhaskar

  8. A Road Map for Implementing the Goods and Services Tax

 

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