World Economy

India Rolls Out GST, People Show Concern

President Pranab Mukherjee (L) and Prime Minister  Narendra Modi launch the GST in the Central Hall  of Parliament in New Delhi on Saturday.President Pranab Mukherjee (L) and Prime Minister  Narendra Modi launch the GST in the Central Hall  of Parliament in New Delhi on Saturday.

While there is no official estimate of the potential fiscal gain, some tax experts say the GST, after the initial teething trouble, would lift the tax-to-GDP ratio by as much as 4 percentage points as the number of tax filers is estimated to more than treble to 30 million.

The days leading up to the introduction of the GST saw chaos of another kind, with Indians rushing to stores across the country to snap up products in anticipation that prices could rise, news outlets reported.

“There should be no apprehension on GST as all tests are done”, Chairman GST Network Navin Kumar said at a panel discussion along with Revenue Secretary Hasmukh Adhia at the Aaj Tak conclave in New Delhi on GST.

At a glittering function Friday night in Parliament’s Central Hall, President Pranab Mukherjee and Prime Minister Narendra Modi, cheered on by some of the country’s top names in politics, business and law, pressed a button to launch GST.

“We are setting India’s roadmap with GST”, Modi said. “GST is simple, transparent and will end corruption and black money.”

Mukherjee also said: “GST is a disruptive change”. Exports will be taxed at zero rates while the domestic sales will be taxed 18%.

Finance Minister Arun Jaitley had stated that those food items which were imposed an average of 12.5% under the Value-Added Tax laws will subsequently be cut-down to 5% under the new GST regime. “Inflation will come down, tax avoidance will be hard, India’s GDP will be benefited and extra resources will be used for welfare of poor and weaker section”, Jaitley said.

“Once the regime settles in, we can look forward to it spurring the economy by incentivizing manufacturing and making business decisions independent of taxes”, Pratik Jain, Partner and Leader Indirect Tax, PwC India, said.

Several opposition parties boycotted the ceremony, resulting in the absence of former prime minister Manmohan Singh who had tried to push the GST for years.

Meanwhile, in a scathing attack on GST in its current form, senior Congress leader and former finance minister P. Chidambaram said it will put a burden on the common man and hugely affect small, medium and micro businesses and entrepreneurs while being inflationary with multiple rates.

Chidambaram said 80% of all goods and services will bear a tax and prices will be higher. “There will be inflation. What is the government going to do about it?” he asked.

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