Friday, October 22, 2021
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GST: Largest Ever Tax Reform Paved The Way For Uniform Tax Regime

We had a very complicated indirect tax system. It was indeed so complicated that it was more easy for Mumbai to trade with Shanghai or London, than it was for Mumbai to trade with Delhi. Now this is not a new problem that I have just discovered. This was clearly known to be an issue when I was in high school. And we kept debating this. As many of you know I am from Kolkata, so you can imagine we really debated it. Now, having debated it for all these decades, what did we do? We arrived we everybody agreeing that some sort of a GST thing needed to be done. And yet, we kept debating, oh my god, we need to change this, we need to standardize that, we need to improve this, we need to prepare more. But the fact of the matter is, when you are introducing such major major changes, and this was going to be the largest tax reform we have ever attempted. In fact one of the largest ever in the world.

We’ve actually never knew till we had done it, what was going to happen. So in fact the only way to find out what was going to happen, was to do it. And that is precisely what we did in July 2017. We were very often told if only you had waited another 6 months, and done more planning it would have worked better. But in fact, none of the things that the experts told that would go wrong went wrong. But there are many things that did go wrong. Nobody told us that the error correction button in the website will not work. Nobody told us that the real problem was going to be the refunds to the exporters. The only way to have therefore found out, was to have done it. And in fact, the people who, GST council and the others wo were implementing this, were fully aware that when it was going to be first introduced for the first three months there would be lots of problems and probably wouldn’t work at all. And that’s precisely what happened. Then few months later, it somewhat worked, and then it worked a little bit better, and now a year and a half later I can say we have a system, that by a large works, in fact it works reasonably well, and without doubt is a dramatic improvement on what used to be there before.

Now this does not mean that system cannot be improved upon, we can keep improving on it. In fact, Finance Minister himself has said that over a period of time perhaps this middle two rates will probably be merged into something, so we will have fewer slabs, and so on and so forth. But it is very very likely, that 50 years from now, we will still be using some similar framework. And we have shifted on to this framework, we can keep improving it, but for all time basically that I can see that we will be using this unified framework. So this is done.

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