GST or Goods and Services Tax is a landmark reform that Indian government is about to implement. This system aims to eradicate multiple taxes in favour of a one-time tax. It aims to bring the cost of various commodities down. For this purpose, four tax slabs have been created and various goods and services have been placed in each slab. While the idea seems novel and all good, there are some crucial aspects which GST does not address. We will not as far as to say it was intended, but some due diligence would have helped. Here are the three big GST issues you should know about.
Three Big GST Issues
Issue 1: State-level Tax
With the arrival of GST, you may think that state-level taxes are gone. But they are not. The biggest issue plaguing GST is state-level taxes that are not just present but vary from one state to another. So, the same item that you buy in your home state may cost more in another state. At least if not abolish them, with GST, Indian government could have just worked out a static rate for all states. This way, at least the rates of commodities would have remained the same.
Issue 2: Item Placement under Slabs
Another big GST issue that is yet to be addressed is item placement under various slabs. This can be explained with one example. The Indian government wants to move to clean transportation. Hence, it also aims to enforce Bharat Stage 6 emission norms by 2020. A big part of this strategy is adoption of electric vehicles. However, electric vehicles are not exempt from GST. Moreover, the smaller, more efficient cars attract same amount of tax as the luxury ones. This sends out one clear message that taxes are more important than curbing pollution for the Indian government. We don’t think sending out such a message is the government’s intent. However, in practice, it looks to be the case.
Issue 3: Liquor Out But Medicare In?
This is one of the GST issues nobody seems to care about. Yes, many of you will not share the same opinion as us. However, consider this. The government has kept consumable alcohol out of GST’s purview but included industrial alcohol and ethanol in it. Instead, it has allowed the states to levy taxes on consumable alcohol. The real trouble here is this – a mixed message is being sent out to masses. The mixed message is that a health hazard will be not be taxed under GST but medicines that can cure you will be taxed. Either the government does not want people to remain healthy or it is trying to appeal to everyone’s inner will to keep themselves away from health hazards such as alcohol.
In no way are we saying that we hate or love the government. What we are trying to say is this – certain issues like those mentioned above should not have existed. While the GST council will meet again on June 3, there is still a chance that these issues may be ironed out. However, now that prevention cannot happen, the government must look at damage control and solve the above issues at the earliest.Do you agree with us? Please weigh in with your thoughts in the comments section below.