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Editorial: GST Rate Cuts & 2019 General Elections

Port Wings, 25 July 2018:

Eversince the GST launched, it has faced several litmus tests and finally, the government bowed to many important demands including nil duty for sanitary napkins, one of the major rallying point for nation-wide protests against the system.

The intention of uniting the entire country into one unified market and dispense with red tape and worse that is keeping the Indian economy shackled, has been severely challenged.

According to the government, GST will help everyone across every segment of the economy and even boost growth of the nation.

Last year, BJP took this calculated risk and its result will be shown only during the 2019 General Elections. Two disruptive policy actions like demonetisation and the introduction of the GST has lead the economy in the different direction and meeting point would be in 2019. The policy of converting demonetisation into a tool for increasing taxpayers is working.

If technology and data analytics has delivered results, both financial and moral, around demonetisation and direct taxes, the GST goes one step ahead on the GST and indirect taxes front. The entire system is electronic. Incentives have been created to ensure compliance — one entity cannot get tax credits if the previous entity does not pass it.

Prime Minister Narendra Modi-led government at the Centre may surprise the trading community, the traditional vote base of the BJP, by bringing in constitutional amendments and make GST a lot more easier and more friendlier before the 2019 Elections.

The changes are expected to be far more deeper than the cosmetic rate cuts done until now. Behind the curtain preparations suggest the GST Council may recommend across the board changes in all GST Laws – Central, state and Integrated – with which the government is expected to go to Parliament in the monsoon session in July. The government is expected to roll out the changes in GST on its first year anniversary so that the impact is felt in the polls in three big states of Chattisgarh, Madhya Pradesh and Rajasthan touted as semi-finals ahead of the general elections in 2019.

It is a known fact that the government does not want to take any chance ahead of 2019 elections. If the changes are brought now, they will slowly start impacting the businesses before the general elections are announced.

Also, their impact will be reflected on the Assembly polls giving a boost to the government in the Lok Sabha elections. Opposition parties, particularly the Congress, are planning to leverage traders’ discontent to change the government.

However, the most significant one that can reduce the pains of small traders are amendment in the input tax credit to release money to them within a month pending the matching and adjustments and, a little less cumbersome scrutiny of returns.

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