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System Reforms, a pre requisite for Economic Reforms

CA Pradeep Garg 
on 03 March 2017

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We are all passing through economic reforms right from 1991, however, the pace of changes in economic laws, policies, procedures etc is neither planned properly nor well thought. Thanks to our policy that is more interested in retaining power and position, rather than making the integrated laws and systems in the country that will benefit the society as a whole.

There are multiple laws on each subject in our country, both in Union & State level and overlapping powers are provided in the law making power in respect of many subjects that stretch over other states as well. This has resulted in disputes between the states and union and many projects are delayed beyond limit to cascade the cost beyond benefits.

GST the major tax reform has taken so many years for implementation and has finally reached its destination now. So much of time has been wasted simply because of division of power between union & states under the constitution and non-cooperation of states with others.

Had we made one Centralized VAT law and all states would have followed it with same rules n forms across the country, we would have achieved the benefit of VAT properly and only uniform tax rates for each class of goods would have done the job. Integrated system of registration & returns under VAT could have facilitated distribution of revenue among states by the union whether on manufacturing level or consumer level without much hue and cry.

Similarly, integrated system of registration n returns under central excise n service tax would have settled all issues had the rate of excise duty n service tax also been fixed on each class of goods n services like VAT on the basis of end use.

Same is the picture of Corporate Laws, govt could have developed an integrated website for each type of business organization like private company, public company, cooperative society, charitable society, registered firm etc so that actual picture of economy, money, banking, taxation etc could have been displayed. Today when govt is aware of over 7 lakh shell companies registered under company law and is planning action, only god knows how many shell firms, societies, trusts, political parties, NGOs etc are operating in the country and eating up the economy of the country.

In conclusion, I want to emphasize only that central govt must consolidate the economic laws to the extent possible but the integrated system of registration and returns on the basis of PAN, CIN and Aadhar Card must be enforced in all govt departments, services and public utilities and welfare schemes in first instance so that correct database be generated for undertaking reforms of all types. 

For GST government is developing an integrated system called GSTN for filing all returns.


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