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GST rate cut politically motivated?

A day after the Modi government won the no-confidence motion, the Goods and Services Tax Council has reduced the GST rates of 100 commodities to offer some solace to the middle class. The government had taken this step with an eye on the upcoming assembly polls to be held in Madhya Pradesh, Rajasthan, Chhattisgarh and Mizoram and 2019 Lok Sabha election. Reduction in the GST rates was done with an intention to divert the attention of people as they were closely following the no-confidence motion moved by Telugu Desam Party (TDP) in the Parliament. Even though the government comfortably passed the no-confidence test by securing 325 out of 451 votes, it was keen to tone down the anti-Modi wave sentiment which was building up due to poor governance. Citizens already are miffed with the government for its failure to deliver the promises made by it.

Congress spokesperson Hemalata Patil said, “Since the election is approaching, the government might even reduce petrol and diesel prices. We already had demanded the withdrawal of GST on sanitary napkins but initially, it was taxed at 12 per cent. They also had made some announcements for farmers with an eye on the election. The government doesn’t bother about the welfare of the common man. We had demanded reforms in the GST and the government has taken this decision under pressure.”

Even Congress leader P. Chidambaram stated that the GST rates were reduced with an eye on the assembly polls scheduled to be held in four states later this year. He tweeted, “When elections are around the corner the government cuts rates. I suppose that makes a good case for frequent elections in different states.”

RTI activist Anil Galgali said, “Arun Jaitley had indicated about a reduction in the GST rates in the past. Before making any changes in the GST rates, the government seeks review and feedback from the public. They had taken this decision to please the common man. This decision has nothing to do with no-confidence motion. Usually, governments take this decision in the last year of their reign. Irrespective of whether BJP or Congress is in power they have to take such decisions in the initial stages after forming the government.”

The council has reduced tax rates from 28 per cent to 18 per cent on 15 items including vacuum cleaners, washing machine, 68 cm (27 inch) TV, fridge, laundry machines, paints, and varnishes. To woo women voters, the government has also taken a decision to fully exempt sanitary napkins from 12 per cent GST slab. The government had already invited the ire of women activists as they have been demanding the withdrawal of GST from the women’s hygiene product. Tax rate on e-books has been brought down from 18 per cent to 12 per cent. The GST rate reductions which will come into force from July 27 is expected to cause a revenue loss of Rs 8,000 to 10,000 crore. The GST council also has permitted businesses with a turnover of Rs 5 crore to file quarterly returns.

Former AAP leader Mayank Gandhi stated, “This decision is politically motivated. Whenever election approaches, the government takes some populist decision. Not only Modi government but other governments too follow the same strategy. Why did the government delay the decision to exempt sanitary napkins from GST? They could have taken this decision earlier too.”

Earlier too the government had reduced rates of several commodities falling under GST with an aim to please the voters ahead of the Gujarat Assembly polls. The government had to face the wrath of the business community due to the imposition of GST. Many business units had to close down while some others had incurred severe losses due to GST. Small traders from Surat, Rajkot, and Ahmedabad had protested against GST. Even middle-class people had to bear the brunt of GST as several commodities and services became expensive. Shiv Sena too had attacked the government for its failure to reduce inflation– a promise which was made by it before coming to the power. However, after the implementation of GST, inflation had increased.

BJP spokesperson Vishwas Pathak said, “The GST council meeting was scheduled three months back, so the decision was taken as per the schedule. No- confidence motion was brought by the opposition on Friday. Therefore, these two aspects are not related to each other. We have already received the support of 325 MPs and have the mandate in the Parliament.”

This decision has not been taken with the election in mind. The government is doing it from the perspective of ‘One Nation One Tax’. GST slabs would have been reduced irrespective of no-confidence motion being brought in the Parliament,” he added.

 

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