ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles By Goods and Services Tax

Did the Implementation of GST Hurt Municipal Finances?

The revenue sources of urban local governments are too small to meet their expenditure needs. Own source revenue generation of ULGs is weak and the increasing dependency on transfers from the higher governments has declined the autonomy of municipalities. The goods and services tax has adversely affected municipal finance. The extent of loss due to implementing GST is examined and ways to streamline municipal finance in India are proposed.

Making Sense of the Property Tax Increase in Kerala

Recently, the Kerala government revised property tax rates, which has attracted criticism from various corners. This article aims to comprehensively examine the fiscal compulsion and inevitable nature of property tax reforms in the state. It argues that the property tax rate in the state is the lowest and an increase in rates is necessary to meet the growing demands for public services and infrastructure, and to ensure a sustainable fiscal future for urban local governments in Kerala.

Agricultural Federalism

This paper argues for a reassessment of the distinct and complementary roles of the union and states in the agriculture sector in accord with the spirit of the Constitution. It then goes on to spell out five principles consistent with these distinct but complementary roles. Finally, the paper concludes by noting that achieving this vision would require the states and union to embrace the kind of cooperative federalism that led to the realisation of the goods and services tax.

A Fatal Blow to the Goods and Services Tax

The Supreme Court’s judgment in Union of India v Mohit Minerals (P) Ltd (2022), while interpreting the 101st Amendment, has weakened the governance framework of the goods and services tax. The Court’s approach in the matter has exposed the fatal contradictions of the GST architecture in the Constitution and should prompt a rethink on how the GST framework needs to change to promote true cooperative federalism.

Is the 14% Revenue Guarantee to States Justified?

When the goods and services tax was introduced in July 2017, states were given a revenue guarantee of 14% per annum on their GST revenue over the base year 2015–16. Using data on revenue from subsumed taxes for 24 states and two union territories during the years 2012–16 preceding the GST, it is investigated whether the 14% revenue guarantee was justified. Not many states had a growth rate of subsumed taxes higher than 14% pre-GST, with most of them falling in the 5%–12% growth rate band. It is estimated that the potential savings in the compensation payment due from 1 July 2017 to 31 March 2020—if the states were assured of compensation at their respective historically achieved tax buoyancy—would have ranged between ₹ 1.8 lakh crore and ₹ 2.12 lakh crore.

Small Businesses, Big Reform

This paper draws evidences from field surveys to bring out the impact of the goods and services tax on the micro, small and medium enterprises by exploring issues of coverage, rate, selection and exemption of taxation, and subsequently, its effect on the competitiveness and viability of these businesses. The coping mechanisms the units undertook to tide over the crisis they faced as well as the GST Council responses are also discussed.

 

Incongruence between Announcements and Allocations

A scrutiny of the Indian economy and the state of public finances reveals that while there are a few areas of improvement under the current government, the economy remains fragile and, worryingly, the situation has worsened in some other respects. It was hoped that the Union Budget 2018–19 would take measures to address some of these concerns but these expectations have been belied. Budget 2018–19, possibly with an eye on elections, has made grand announcements instead of taking hard decisions and making adequate allocations towards key sectors of the economy.

Small Businesses in the GST Regime

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.