India is at the precipice of a paradigm shift in public policy with respect to indirect taxation in India. Goods and Services Tax (GST) is not just a new tax to be levied rather it is a transformative effort in the direction of expanding the arena of digital governance in India and Good Governance, says Mukesh Kumar Meshram, Commissioner, Commercial Taxes Department, Government of Uttar Pradesh, in an interview with Elets News Network (ENN).
“The vision of GST is intricately intertwined with Digital Governance. It envisions tracing every business transaction throughout India without breaking the chain of benefits given to the traders.”
How do you envision GST bringing digital governance in India and Good Governance? Goods and Services Tax encompasses a holistic vision which seeks to propel economic growth, usher in a consensus-based uniform legal regime in the country reflective of co- operative federalism and further the goals of transparent, corruption-free and responsive governance.
GST has been implemented internationally in varied formats. In India, the idea was being contemplated at various fora but the formal genesis lies in the Kelkar Committee Report published in 2005-06. The seed of this idea traversed a long and meandering journey to finally bear fruit in the form of the already passed GST Laws in the Centre and in most States. The journey travelled from a mention in the Annual Budget Speech of 2006-07 to a Discussion Paper in 2009 to the meetings of the Empowered Committee of State Finance Ministers to the Constitutional Amendment to the GST Council to the Model GST Law and then the GST Laws passed in the Parliament as well as the State Legislature. Despite all the hurdles it faced, GST is seeing the light of the day because it is genuinely needed in the country. The present indirect taxation system has caused a severe cascading effect which undermines the economy, overburdens the consumers financially, makes our products uncompetitive globally. Multiplicity of complicated procedures and tax rates in various states constitute a difficult business environment.
How will GST help in economic growth of the country and give a boost to Ease of Doing Business?
Thus the need to bring about GST overwhelmingly lies in the core idea underlying Ease of Doing Business. Hence, GST aims to simplify and streamline procedures, bring about uniformity in tax rates and thus create an enabling environment for business, in particular, and growth of the economy in general. It would lead to the creation of a Common National Market. For the consumers, the biggest gain would be in terms of a reduction in the overall tax burden on goods, which is currently estimated at 25-30 per cent. Introduction of GST would also make our products competitive in the domestic and international markets. Studies show that this would instantly spur economic growth. There may also be revenue gain for the Centre and the States due to widening of the tax base, increase in trade volumes and improved tax compliance.
For all of the above, a Constitutional Amendment was also necessitated. The 101st Constitutional Amendment Act 2016 amended the requisite provisions of the Constitution. Most importantly, it conferred concurrent powers of taxation on goods and services on both Centre and states. The administration of GST needed a new constitutional body to be set up which would be comprised representatives from both, Centre and States hence the creation of GST Council. The GST Council has held 15 meetings till now. The honourable Council has approved Model GST laws and rates of taxes on commodities. Thus, the legal stage has been set for GST.
Please define the role of Goods and Services Network (GSTN) and how it will help taxpayers and tax officials?
Now the entire legal edifice of GST cannot be translated into an effective governance measure without robust Digital Governance. It involves both the taxpayers and Officers. To realise this, a Special Purpose Vehicle has been set up, i.e. Goods and Services Network (GSTN). It is responsible for management of the IT infrastructure for all the states. All tax officials and taxpayers would work on its portal – www.gst.gov.in. Since the entire system would be completely digital, a number of Facilitation Centres and GST Mitras would also be available for helping out those less comfortable with technology. The Government is also firming up its IT infrastructure to ensure a conducive environment for both taxpayers and tax officials.
GST can perhaps be identified as a leap of faith in Digital Governance. It is the first policy in India which in its very inception envisages Digital Governance rather than an afterthought. Thus, the computerisation of systems which has been done hitherto would now be history. Now Digital Governance would truly become the reigning paradigm of indirect taxation in India, the G2B and G2C interface being completely digital in GST.
Will GST ensure a hassle- free and transparent system and increase the overall tax efficiency?
The vision of GST is intricately intertwined with Digital Governance. It envisions tracing every business transaction throughout India without breaking the chain of benefits given to the traders. This task is impossible manually. The idea behind GST is that the taxpayer should comfortably be able to comply with the taxation system only through the digital interface. It’s only in the eventuality of tax evasion that the taxpayer would ever interact with the tax official in person. This would ensure a hassle-free and transparent system as well as increase the overall tax efficiency. This explains that why perhaps for the first time in India, law and procedures of Digital Governance have evolved together.
GST is also a true endaevour of participatory governance. Widespread pre-legislative consultation has been carried out throughout the country. Stakeholders have been consulted with at every level, i.e., from GST Council, Empowered Committee to GST Seminars and Awareness being conducted in every district. Other means such as newspapers, Radio and Social media is also being used to create awareness among stakeholders.
Are we ready to adopt GST?
This is frequently asked question that are we ready for GST. The answer is that although it is a continuously evolving process and a Learning Curve is bound to exist, all the officers of the Department have been trained in GST law and Rules twice and Software training has been completed for all the officers and employees. More than 80 per cent of our taxpayers are already enrolled on the GST portal. The spirit of co-operative federalism is pivotal to the success of GST. Conclusively, the stage is set and we are all going to witness a historic Public Policy transformation. I hope that we all would be together in this and make it a huge success.