GST – Where It All Goes Wrong!
Goods and Services Tax – The biggest tax reform in India since independence! Conceptually, the best thing that could happen in a country laden with incredibly complicated tax structure. For a very long time I have been a strong proponent, till I saw chinks in the chain.
Don’t get me wrong. It’s a great philosophy. It’s the right thing to do but for the implementation structure and the actual execution. It’s a classic case of the Indian politico ruining something good, just so they don’t lose votes.
So, what’s wrong with GST:
GST should have reduced the amount of Tax people pay. I expected the maximum tax slab to be 12%, while we have it as high as 28%. Remember, higher tax rate is higher incentive for tax evasion.
Numerous categories making it difficult for people in small businesses to implement it. Consider this: I am renovating my bathroom and go to a store to buy stuff. The shopkeeper says I will create 4 bills for you. One for tiles, one for pipes, one for tap fitting and one for imported tiles. The reason being they all have different TDS slabs.
Last, but not the least. It became another appeasement policy. It almost seems like we want everyone to make a lazy bum, be dis-incentivized to run a business. Not everything needs to be free for the poor! Why are we so afraid to go and do the right thing?! Ask people to give their contribution to the society, at an equitable level. No more freebies, no more tax higher for loan waivers.
I thought this government will be different, they will have more spine. YES, spine! That’s what it takes. Government seems to already be in an election mode, may be they never got out of it. 2019 – here we come!
The first few months will be crazy, that is always expected in a transition, but that’s not what worries me. It’s the long-term implication of this system that scares me. The ultra-optimist in me keeps saying more reforms are coming; the subdued cynic keeps saying nothing can make it better. For today, the cynic is taking over!