Where Are Panchayats in GST?

One should not forget that in India, the government exists at three tiers: centre, state, and local, that is, at the panchayat and municipality level as well. This spirit of cooperative federa­lism is not reflected in the GST, as panchayats, which number at 2,56,252 and which consist of more than 3 million elected representatives, are excluded from a share in the same.

Cooperative federalism must travel down to the third tier of government because of the effects that the implementation of GST is likely to have on panchayats: (i) Drying up of finances, in the ­absence of a provision for revenue sharing between the states and panchayats in GST, (ii) while states derive their power to levy taxes from the Constitution, ­panchayats derive the same from the state legislatures, resulting in an absence of bargaining power, (iii) a further dilution of the autonomy of panchayats, (iv) a further weakening of rural governance, and (v) greater obstacles in the delivery of basic services.