The impact of goods and services tax on the Indian army is very deep and has taken the overall debt up to 5 thousand crores. As earlier it was known that the Indian army lacked basic necessities like ammunition, arms, assault rifles, battle tanks and bulletproof jackets, now it is again under the burden of goods and services tax of up to 5 thousand crores applied by the Indian government.
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- 53rd GST Council Meeting: The govt has exempted certain items from GST for defence forces until 30th June 2029. The items are imported from foreign countries.
All three 3 forces are heavily impacted by the new tax laws and customs duties which had created hurdles for the army on the monetary front. Rashtriya Rifles, the Army’s anti-insurgency force responsible for countering the issue in Jammu and Kashmir is also shortened with 136 crores of funds needed for the modernisation drive of the army.
The battalion regularly executes the campaign to catch hold of terrorists and cease other militant activities across Jammu and Kashmir and is now under a monetary shortage. While the Indian army recently stated these issues in front of the Parliament’s Standing Committee on Defence, on this matter the panel stated that this time the army will have to pay the required amount of GST due to the changes in tax laws.
The panel stated that “an additional burden of Rs 5,000 crore will be levied on the Army because of the new taxation laws in the form of GST. This has not been accounted for in the current year’s Budget for the Army.”
The revenue Budget comes in handy for the day-to-day operations, including maintenance of weapons, and the supply of ammunition and fuel while the panel suggested to the government that it should sincerely watch over the budget deficit factor of the Indian army which is a tune of INR 9282 crores.
The deficit revenue budget summarises compulsory requirements under transportation (Rs 889 crore), maintenance works (Rs 1,413 crore), supplies (Rs 1,419 crore, ordnance store (Rs 5,425 crore) and Rashtriya Rifles (Rs 136 crore).
The shortage of funds has led Army vice-chief Lt General Sarath Chand to state that as many as 25 Make in India projects will have to be closed. The Indian army was also going through the modernisation program for more than 125 projects for which Rs 21,338 crore was allowed. Ironically the allocated budget has been short of an earlier proposed amount and made some stances over the allocation strategy.
The Indian navy is also under the crunch of goods and services tax as it will have to spend more than 800 crores for the debt payment of taxes earlier which stood at 427 crores in the last fiscal. Coming to the Indian Air Force, the security wing had paid a service charge of around 934 crores in 2016-17 which is less than the now charged 1614 crores in 2017-18. Also, the amount had not been disbursed to the IAF according to the sources.
Overall the panel suggests a better plan for the budget allocation this year to counter the shortage of monetary issues of the army wing of India.
