Administrative reforms which should precede GST implementation

NDA government has ushered in an era of hope in the country. Indian economic outlook bypasses that of the world by approximately 3 percent. The reforms which have been initiated by the government have put India on a sustainable growth path. This is also reflected in  the performance of India in Macroeconomic Vulnerability Index (prepared by Ministry of Finance). The index comprises of inflation figures, CAD and the fiscal deficit. India was at top of the whole bunch in 2013 with a value of 22.4. However, the value in January is above 15 and is expected to increase further. GST is bound to introduce a sound revenue source for the government and stabilise the fiscal position of the nation. It will also help to mitigate corruption in collection of indirect taxes.

• Introduction of GST in addition to the above will also involve transferring of vital resources to the consuming states. Thus, if impact of GST has to seen on the national economy, the states will have to implement the needed reforms as many developmental factors in India are no longer controlled by the states.
• Also, both the structural and administrative aspects of GST at the Centre and State level have to be worked out. Although the rates will be standardised across the nation, it will provide a narrow tax band over and above the floor rates of CGST and SGST  which should be kept within limits.
• GST is also slated to introduce an origin-based tax on inter-state trade. As per the GST Council, a levy of non-VAT-able Additional Tax not exceeding 1percent on supply of interstate trade for a maximum period of 2 years will be made. This will stem the revenue loss to the producing states.

Furthermore, a thorough re-look into the department of GST at both Centre and State levels is essential. A proper audit plan should be well prepared to span the economic activities and a huge number of taxes. MIS also has to completely integrated into offices of SGST and CGST.