Suggestions have been made by the Economic Advisory Council to the Prime Minister regarding the relinquishment of the lowest tax rate slab of 0% and the highest tax rate slab of 28%.
It has been two years & a quarter since GST has implemented in 2017. There were dual ways to introduce this reformation. One is to deliberately discuss and finalise a standard GST rate under which every product can be kept, this is a time-consuming method which may take 20 or more years. And the second one which we chose is the one in which glitches can be resolved simultaneously with the implementation, in short, the Work-in-progress method.
Modi government ousted the waiting time of 20 years and implemented GST which is still making strides and uniting state & government to work exceptionally well & take prudent decisions.
GST subsumed all kinds of preceding tax rates and was expected to give a hike in GDP by 1-2 percentage points but it could not happen. According to Bibek Debroy, who is an expert Indian economist, it was irrational to expect an instant growth in GDP as it is time-taking process and an ideal GST rate will certainly spur up the GDP 1-2 percentage points but in a time-frame of a few years. He justified the statement by giving examples of other countries across the globe who have strived for 10-20 years to attain an ideal VAT (value-added tax).
He also put forth his views on States’ recommendation for the extension of compensation period beyond five years, saying that it was just a stimulus for State government to acknowledge GST, for which Union Government made up its mind to bear revenue losses but that can not go beyond for longer time-period as GST is half-half between the state & centre government.
Small companies which position below the threshold limit of GST are despondent with GST because big companies prefer to import goods or buy them from larger entities over these small companies as they do not get credits when they deal with small companies. Moreover, the various rate tax slabs and complicated processes have also been a matter of concern for small entities.
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According to Bibek Debroy, there should only be three tax rates – 6%, 12% and 18% and every product should come under GST by updating the extreme rates of 0 and 28%. At the same time, GST chain should be extended to small suppliers who come below the threshold limit.
