“Aachey din ane wale hai”- This was the tagline that BJP used to reach the powerhouse of the second largest democracy of the world i.e. “The Indian Parliament.”With the country heading towards its Budget 2014-15, the question to be unrevealed is-“Will the good days come?”
At the moment when GDP growth rate is striving hard to come above mere 5%, the question that strikes the mind is-“Will the golden birds return to India again?” These mountainous question brings us to an expectation, a ray of hope from the newly formed government. The Indians expect that when the honourable finance minister of India opens his briefcase on 10th July,2014, he will have gifts and only gifts for them. The market players and the market forces, the economy as a whole will sit up glaring their eyes widely open to see what the ‘could be’ magical basket has for them.
I personally feel that the winds of change have started blowing in the country since the election results were declared on May 16.I feel that the government in power will bring growth and prosperity to the economy and this budget shall be the “shubharam.” The most crucial of all legislations expected will be the Goods & Service Tax (GST).It is a value added tax that will replace all indirect taxes levied on goods and services.It will simplify the indirect taxation structure of the country.
In GST, there will be no tax on exports which will boost it and the rates of domestic taxation will apply to import of goods and services. The GST rates are expected to be between 16-20 percent. The GST legislation will bring more assesses under its purview and tax collection is expected to rise significantly. The GST system will incorporate a system of cross-checking and tax will be paid only when value is added to the goods and services. This is expected to reduce paperwork formalities under various indirect tax laws which used to be troublesome for business houses and professionals.
GST will bring lots of benefits with it. It is expected that due to the implementation of GST alone, the GDP growth rate of India may rise by 2%. As “Necessity is the mother of invention“- the need of the hour is a simplified tax structure to increase tax compliances and reduce burden. With India heading towards the top economies of the world, the need to cope up with the modern business environment is required.
With the business environment changing by leaps and bounds, the government is expected to bring this new reform which has been pending since 2010. India has already hit 45% ($ 40 billion) of the fiscal deficit of the current financial year in the months of April & May. The wholesale inflation is at its 5 month high while the retail inflation is above 8%. To counteract such figures, a game changer such as “GST” is required and is the demand of the situation. “Old is gold”, but such phrases do not work in an economy. Traditional and old laws have become outdated with time and needs a changeover.
India’s tax collection amounts for about 8-9 percent of GDP, whereas the ratio is quite high in other countries for eg. in Norway it is 27.1%. Tax evasion has always created hue and cry for the government in power. With assessment orders pending and thousands and thousands of cases yet to be decided upon, the government is crippled. Hence its imperative to boost tax collection for economic survival. As Charles Darwin quotes- “Survival of the fittest.” The same is with economies. Only healthy and fit economies can compete and march ahead while weak ones stagger and fall apart.
However some hindrances pose blockades in GST implementation. The prime and most important being the worrying looks of some states. They feel GST will lead to an erosion of their revenues and they seek compensation for the same. Its imperative that GST is implemented with a supporting environment. Hence prime focus must be on creating a conducive and smooth environment for GST to be rolled out and operated smoothly.
Every law has its pros and cons but it is the strategic leader who removes the thorns and leaves only blossoming flowers on the plants. This reform will be a new revolution in the country. The country which could not gain the advantage of industrial revolution is now being lead by the government which has the power to start up a new revolution. This can turn the tides for India. India is currently ranked 134th in context of ease of doing business. This itself displays why foreign investors hesitate to invest here. However with such a revolutionary reform we will see foreign investments flowing in India. Thus keeping hearts stout and brave, the government should move ahead with head held high and roll out the GST. The vision needs to be clear and positive and we will soon see golden birds returning back to India again.
Name : Chirag Agarwal
Qualification : CA Finalist