GST: The road gone by and the road ahead

GST – Goods and Services Tax – one simple abbreviation to remove all the complexities of taxation in India. The name is so simple to understand that even a 16 year old child with some substantial knowledge on India can get an intuitive idea of what this tax is about without studying it in detail. Even after knowing that a GST will make things simpler, it took us 15 years of 21st century to approve it in the lower house of the Parliament. That is actually too much time.

It is commonly known to all that there is always a considerable amount of delay in decision making in a democracy. Then again, its counter advantage is that in a democracy, this eventual delay gives time to ponder and think upon plans to be considered and avoid wrong decisions. That amount of time would be fruitful only if the decision is successful. Similar is the case for the Goods and Services Tax. If successful, everyone would forget the 15-year delay; if unsuccessful, God knows how people are going to suffer and react.

But what took GST so much time? Let us see – GST: The road gone by and the road ahead.

2000: NDA government sets up a committee headed by Asim Dasgupta to discuss on GST.

February 2006: The then Finance Minister P. Chidambaram mentions the concept of GST in his Budget speech and the deadline to implement it was set for April 2010.

2006-2009: Government and Finance Ministry studied international models of GST and came up with recommendation on dual GST.

November 2009: Discussion paper on GST released.

2011: Task force formed by 13th Finance Commission issues report to adopt dual GST model. The Constitutional Bill (115th Amendment) regarding GST is introduced in Lok Sabha.

2011-2013: States disapprove the Bill as they believe it is a threat to their freedom to impose and collect taxes.

May 2014: The bill lapses with dissolution of 15th Lok Sabha.

December 2014: The bill is re-worked antroduced as Constitutional Bill (122nd Amendment) 2014.

Here is the road that lies ahead for GST-

1. Pass the Bill in Parliament and its approval by at least half of all states.
2. Arriving at a rate for GST.
3. Legislative model to be adopted by states to implement GST.
4. Create rules as to where should goods and services be taxed.
5. Design an effective GST network for its proper administration.

I hope the GST model becomes a success. If successful, I want to remind everyone that come 2019, when India will gear up for its next Lok Sabha elections, do not judge BJP because it implemented GST. This model is a hard work of 15 years and involve efforts of people both from UPA and NDA governments. It should be considered as collective effort rather than one-party effort.

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