GST – A BOON OR BANE
Everybody in the country is talking about the GST and everywhere it is said that GST will increase our GDP, boost our economy, etc., but at what & whose cost? There are a number of serious disadvantages of this system which were not addressed adequately.
First & the foremost, the basic exemption limit in excise of Rs. 1.5 Crore will be taken away in GST, thereby slowly killing the SSI. Thousands & lakhs of industries in India are surviving only for one reason that they are not required to pay excise if their turnover does not exceed 1.5 crore. This had made their products cost efficient and saleable in the market. In GST regime they will not be getting this benefit and will result in increasing the cost of their products and thereby they will be left to slow death. Think of this huge business, which would be forgone by these SSIs. Where it will go? Certainly, the big industrial houses are going to get benefited in a massive way. The small industries, SSI etc, would die their own death, whereby all other people associated directly or indirectly with these SSIs would be put to undue hardship resulting in unemployment. They will be forced to work only for big houses. Whether this kind of growth is envisaged? Should they loose their self respect by shutting down their own business and go for employment? Also the thousands of CA’s who are giving their professional services to these SSIs, one way or the other, would loose their professionals work. They will not have any option then to work for the big auditor firms. Thereby resulting in a big benefits to the big audit firms. They would be in a commanding position. The big salary which today they are paying to various CA’s employed with them would drastically come down.
Overall economy would grow. The real wealth of our country also would grow. But this growth would be without development. The majority of the people would be at the mercy of a few number of big business houses. The rich would become more rich and poor would be more poor. Huge inequalities in income and wealth would be visible. It is just like what is happening in other developed countries. One recession is enough to shake them. Whereas, we developing nations did not have much pinch of recession.
If the government is of the opinion that overall tax collection would increase under GST regime, then why the exemption is to be removed. Instead, the limit of exemption should increase to pass on the benefit of growth to the lower income people.
Another disadvantage is that the services which hitherto were charged on receipt basis will be charged on accrual basis. This is an irony that even without having the certainty of receiving the payments for the services rendered; GST would be required to be paid, once invoice is raised.
It is high time to give a revisit to GST. If it is felt that it is the necessity of the day to go for GST, then proper measure may be taken to safeguard the interest of SSIs. This can be done by various mechanisms such as:-
- Upto the limit of Rs. 5 crore Turnover, the SGST alone should be charged and CGST need not to be charged. Above 5 crs both the taxes may be levied.
- No CGST for essential items like food etc.
- The turnover limit for compounding tax may be increased to 1.5 crore. The compounding GST paid on this sale shall be allowed to be set off by the purchasers as the input GST.
- The GST on services may be charged on old system of receipt basis.
The above ways are only illustrative. Further ways may be worked out.
It may be remembered that overall growth & prosperity in the life of more number of people is really a development. But growth only for small no of people is really not the growth expected. Let us hope, our politicians sitting in the parliament would apply their brain, understand the plight of the mass and stand above the self.