Mumbai : Unlike demonetisation, Goods and Services Tax (GST) is not a surprise. The country has been talking about it for last 16-17 years, said chief economist of Aditya Birla Group, Ajit Ranade.
“This is a reform that has been discussed, debated and analysed for long. It is not a big surprise,” said Ranade while delivering a lecture at Observer Research Foundation.
He also added that firstly this reform is fundamental in nature which is moving the indirect system of the country from production based to consumption based. Secondly, this reform is a grand bargain where all the states readily surrendered their taxation system for GST. Also, it will eliminated cascading taxes and will allow inter locking of incentives. Ranade added, “This will increase tax compliance and decrease tax evasion. This is an interesting feature of inter locking incentives.”
Due to more incentives and low tax evasion, he expects tax collection to go up. The tax collection would have gone up further if the slabs were as per Kelkar Committee’s recommendation of 5 and 12 per cent, he added. Due to the present GST slabs, India is not following one nation one tax regime, he stressed. India had 1,800 tax slabs. Now, it has come down to six slabs, Ranade believes this is a progress the country has made. However there is room for more changes.
He further added, “The more the category or slab or definition, there is more room for dispute, litigation and more importantly corruption.” Backing his claim with data, he said around Rs 5 lakh crore is locked in tax disputes in India. Apart from indirect taxes, he also had strong view about direct taxes. He said that if we do not reform direct taxes like the country did for indirect taxes (with GST) then this task is incompletely.
