GST (Goods and Services Tax) – Let’s go Back to Basics

These days we hear and read a lot about the latest thing which gave birth to yet another “New India”.

  • It is ‘transformative’,
  • ‘it is Good and Simple’,
  • ‘it creates a single economic block larger than Eurpopean Union’

so on and so forth.

It is GST – Goods and Services Tax.

Narendra Modi and Pranab Mukherjee

we hear and read a lot about the latest thing which gave birth to yet another “New India”

We meet this thingy face to face in the form of

  • higher restaurant bills,
  • increased mobile phone charges,
  • additional bank charges and
  • paying more for dozens of other goods and services.

Certain things got cheaper, no doubt, for example

  • Mercedes-Benz, Audi, BMW Audi became cheaper
  • Honda, Renault, Maruti and Tata cars cost less.

We hear about

  • traders in Surat’s textile market going on strike “There are over 70,000 textile trading shops in 165 textile markets in Surat, with a daily turnover of Rs 135 crore.” )
  • protests by delhi shop keepers
  • woes of Dharavi leather makers
  • Tamil Nadu textile businesses going on strike
  • match box makers complaining and so on.

We listen to

  • shop keepers worrying about fall in business
  • and shoppers talking about price rise.
Asim Das Gupta, Former finance minister of West Bengal

Asim Das Gupta, Former finance minister of West Bengal (of CPM) who chaired the Empowered Committee of State Finance Ministers on GST.

There are pundits and experts to soothe the fears and pain.

  • ‘It is better than what we had before (many taxes, many rates)’,
  • ‘there will be initial hiccups, we will see the improvement in a couple of years time’,
  • ‘checkposts at states’ borders will vanish’,
  • ‘GST will eliminate cascading effect of multiple taxes’
  • ‘this will add 2 percentage points to GDP growth (and hence lead to job creation)’,
  • ‘there are about 160 countries which have implemented GST’ and so on and so forth.

There are issues such as

  • loss of taxation powers to state governments
  • higher taxes on goods and services of common use and lower tax on luxury items
  • etc

Let us try to make sense in simple economic terms of a common man making a living by working and struggling to make ends meet every day, every week, every month.

There will be a series of small posts, enabling readers to provide more inputs, questions and engage in discussion.

To come

  1. What is GST or Goods and Services Tax (Why 2 terms?)
  2. How much it simplifies and for whom? (the short answer : for Indian and multinational corporates)
  3. From whom it collects? (the short answer : from salaried employees and wage workers)
  4. Who supports it, who opposes it? (the short answer : none of the mainstream political parties including CPM oppose it, in principle. They differ only on details)

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