GST: Government of India grappling with the issue of “Revenue Leakage”

Lalit Shastri

There is no end to problems linked with GST – initiallty leading to county-wide anger over a multi-tier tax structure of 5, 12, 18 and 28 percent.

The Government of India, after the new tax regime was overhauled and the 28 percent tax levied on 178 items was reduced to 18 percent or less earlier this month, is now grappling with the issue of revenue leakage.

The Union Finance Secretary Hasmukh Adhia has called a meeting of all State Commercial Tax Commissioners and other senior officers responsible for GST implementation in the States on 9 December 2017 in New Delhi to review the revenue trend under GST and discuss what can be done to prevent leakages and augment the revenues.

The Chairman CBEC, GST Commissioners and Chief Commissioners of Central and Starte Government will be attending the meeting in new Delhi.

The Meeting has been convened mainly to dicuss the reason for low level of revenue as compared to what was being geneated uinder the VAT/Excise/Service Tax regime.

The concerned officers, both at the Centre and in States, have been asked to compare teh revenues of top 100 companies of the State with their past performance and the status of eway bill system in teh States.

Although not related directly with the agenda for the 9th December meeting, those in knowledgable circles questioning the logic behind the anti-profiteering authority. It is being pointed out that prices should be determined by the market and the authority should not be given the power to control prices of goods and services.

The idea of forming a private limited company with private players to implement the GST goes against the whole concept of sovereign responsibility of administering tax administration. It is to be underscored that India is a Union of States and the Union should not become weak by giving the States excessive leverage when it comes to implementing GST. It was weak institutional framework and tax administration that was responsible for the fiscal developments that eventually flared up the Greek crisis. (September 15, 2016) Click here to read more

One comment

  1. This is how a seasoned bureaucrat views GST and the mess it has created:
    “What happens when u have dyarchy in tax collection? It leads to anarchy”
    This observation comes in response to this news story.


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