For an economy that is grappling with the painful fallout of the new tax regime, the Goods and Services Tax (GST) Council has provided some relief. It has cleared a simple filing system for businesses to claim input tax credit. The decision to allow filing a single monthly return for all taxpayers is a welcome development. However, the composition dealers and those with nil returns would be required to file a quarterly return. The tax compliance would become easy if there is a simplified, non-obtrusive and administratively efficient system of matching returns and invoices. Hopefully, it would eventually move towards a more efficient and transparent system as audit trails of value addition across the income and production chain will help curb evasion and increase collections. No doubt, GST is India’s most ambitious tax reform since independence and teething troubles are bound to be there. Apart from technical glitches and differences among the States over the tax structure, there was initial scepticism in some quarters over the hurried manner in which the reform was pushed through. The three-stage process of filing returns was cumbersome for many businesses. The latest decision taken at the 27th meeting of the GST Council to simplify it will allow both taxpayers and government systems enough time to make a smooth transition. The taxpayers will now be required to file just one monthly return, with the dates being spread out based on turnover. As the country moves along the single taxation path, there would come occasions when the government needs to display flexibility and readiness to address the grievances of the taxpayers from time to time.
However, what came as a shocker was the Council’s decision to introduce a cess on sugar over and above the GST rate. This is totally regressive and reminiscent of the repressive systems of the past. The objective may be to raise additional money to be set aside to offset problems faced by sugarcane farmers and sugar mills on account of a current glut but the consumers are needlessly made to bear the additional tax burden. While the sugarcane farmers’ distress is real, the solution lies in implementing the Rangarajan committee’s recommendation to pay a price that is in direct proportion to the sugar industry’s profits. Since sugarcane crop is limited to a few States, a nationwide extra tax is not justifiable as it will lead to similar demands for more taxes to help farmers of other crops specific to certain States. It is perplexing that the Council has decided to make the GST Network (GSTN) a wholly government-owned entity. Keeping a company that is responsible for building and maintaining the information technology infrastructure under total government control would be a regressive move.