It refers to Union Revenue Secretary making honest confession about a rejig required in rate-structure of Goods and Services Tax (GST) just after three months of its implementation from July 1, 2017, meaning thereby that GST was implemented in a hurry without any proper groundwork. It is beyond understanding how GST-rates were fixed so irrationally when every type of study could be made within minutes by feeding existing data on computers. Bitter fact is that such a nice reformative economic step became a big headache for everyone because of a total failure in implementation.
A practical new Union Revenue Secretary needs to be appointed who can provide a totally overhauled GST-system with a rational tax-structure from January 1, 2018 by providing quarterly single tax-return but with provision of monthly tax-deposit. Input-Tax-Credit (ITC) should be only for commodities sold as final product. No ITC should be there for in respect of raw material required for finished product. GST invoices must have only one net payable price printed with GST mentioned separately together with rate. GST can be calculated reversely on net payable price with rates 0, 5, 10, 20, 30, 40, 50, 70 and 80 per cent meaning thereby that a commodity priced at Rs 100 will have Rs 10 GST on basic price of Rs 90 with effective GST-rate of 11-per cent. While under 80 per cent slab, effective GST will be 400 per cent abolishing concept of cess altogether.
Parts and unfinished products can be under slabs of 5 or 10 per cent, while finished products (without ITC on parts) can be in higher categories. Items like cars, TV sets, refrigerators can have double slabs according to net payable price with lower-priced under 20 per cent slab and higher-priced in 30 per cent slab to make companies keep price-tag low for benefit of middle and lower class, and to compete by giving better at lower price-tags. GST for service can be drastically cut to 10 per cent by bringing all with annual earning of rupees five lakhs from service. It should be responsibility of GST-registered availing service to deposit GST on-line in account of service-provider like presently exists for Tax-Deposited-at-Source (TDS) for Income Tax. Service provider can deposit GST on services where GST might not have been deposited by those availing service. ITC should be altogether abolished for service-sector.
Subhash Chandra Agrawal
(The views expressed by the author in the article are his/her own.)