A Congress minister from Karnataka has hailed the Goods and Services Tax (GST) as a “game changer and good reform” but maintained it should be made simpler by reducing the number of slabs as well as rates. Karnataka Minister for Large, Medium Industries and Infrastructure Development R V Deshpande said some changes are required in the current GST structure as “small traders and businessmen are suffering”.
Deshpande said GST should have come under the UPA government itself but BJP then opposed it. Later, there was a delay in its implementation as opposition parties did not cooperate on certain issues, he added. “When everybody was on-board, it was done. But, this being a new reform and a game changer — ‘One Nation One Tax’ ultimately is going to benefit (all).
“Yes, there are teething problems…a lot of them have suffered and are suffering. Though there are issues, I am sure they (the government) will act and I am happy some initiatives were taken by Union Finance Minister Arun Jaitley to resolve them (problems related to GST). But, still a lot has to be done,” Deshpande told PTI. GST should be made a simple tax, he said, adding “definitely it has to be further simplified…then only it would be successful. There is a GST Council and it has to take decisions (on contentious issues).”
Currently, the GST regime slots items under tax rate slabs of zero, 5, 12, 18 and 28 per cent. An additional GST cess is also levied on certain products. Deshpande said the Union revenue secretary has himself said they have to rejig GST rate structure and that has to be done immediately. “Because small and medium industries, small traders and small businessmen…they all are suffering.”
“How many compliances…ultimately we should have less slabs and tariffs should also be less. The finance minister has also spoken about reducing those slabs from five…we hope things will happen and we should support that,” he said.
In all countries where GST has been introduced, there has been generally one rate and hence, the slabs have to be reduced under the new indirect tax regime, the Congress minister said.
Deshpande maintained Jaitley has rightly said it cannot be done overnight and the system has to stabilise. “It is a new reform…we have not been able to adjust to it. It may take a few more months…once it is adjusted things will happen…even the finance minister has made a positive statement on that,” he said.
Asked about the recent decisions on relaxation in GST rules that brought some relief to small and medium businesses, Deshpande said “this was done after a lot of pressure was built (on the Centre). There had been a negative feeling about the Union government (on GST)…they had no choice.” Structural changes have to be done and they should bring them immediately, the Karnataka minister stressed.
Deshpande hailed the Centre’s recapitalisation plan under which Rs 2.11 lakh crore will be infused to strengthen the NPA-hit public sector banks. “I am happy that recently one or two important decisions like infusion of funds into PSU banks and infrastructure were taken. Infrastructure spending has to increase and banks have to reduce interest rates,” he said.
On demonetisation, Deshpande said he also welcomed the move initially but the measure has failed to achieve its stated objective. “…but today if you see the result the purpose for which it was done has not been fulfilled. Where is the black money? Over Rs 15 lakh crore (of junked currency) has come back (into the banking system post-demonetisation). Banks are flooded with funds.
“(Former Prime Minister) Manmohan Singh, during a debate on demonetisation in the Rajya Sabha, had said the GDP (growth) is going to drop by 2 per cent (due to note ban) and it exactly fell by 2 per cent, from 7.7 per cent to 5.5 per cent,” Deshpande said. “I think a long rope (window to deposit junked notes) was given to deposit money and that is one of the reasons where it took a hit. Ultimately, black money has to be eradicated and we should all support (its eradication),” the minister added.