GST impact on economy: Ruling out any price rise post Goods and Services Tax (GST), former Revenue Secretary Shaktikanta Das has said such apprehensions are “misplaced” and initial hiccups in its implementation will be sorted out in the next 2-3 months. Das also said that the Centre and states are well prepared for smooth implementation of the GST, which was launched on the midnight of June 30. GST has subsumed all indirect taxes including VAT and octroi into single tax nationwide. It has been adopted by all states barring Jammu and Kashmir. Asked if GST will result in spike in prices, Das said, “Not at all” and “it is misplaced” as people are looking at taxes from only one side.
People are looking at an increase in prices of goods/services on which taxes have been hiked. However, they are not seeing the input tax credit been made available to the industry, he said and urged people to look at the tax reform holistically.
Under input tax credit facility, the industry is taxed not on purchase of raw material but on value added products. Das further said, “The other side of the story is that input tax credit will be available. That will have moderating impact on so called increase in tax rate.
“Therefore, the increase that people are talking about is not that much. You need to see the whole basket. You cannot pick up 5 items and say prices have gone up,” he elaborated. On concerns about glitches in GST rollout, Das said, “Any new system will have implementation issues. I think in a matter of 2-3 months, the glitches and hiccups are likely to come up. They will all be resolved.”
He said that the industry could face problems in filing tax returns or may commit mistakes and not able to avail input tax credit and remain confused over applicable tax rates on various commodities, among others. “Problems like this are bound to happen. Going forward, everything will get streamlined,” he said.
On the day of its launch, President Pranab Mukherjee had described GST as a “disruptive change” that is bound to have some teething troubles which will have to be resolved quickly to ensure growth momentum in the economy is not impacted.