Dealing with after-effects of reform

A critical part of the package are the process reforms for simplifying registrations and expediting refunds, both for inverted duty structure and exports

- VIVEK JOHRI

THE RUN-UPTO the 56th Goods and Services Tax (GST) Council meeting was full of mixed sentiments—lots of excitement about the broad-brush picture of GST 2.0 reform and yet some lurking apprehension about the likely fine print. There was some relief when the Group of Ministers approved the Centre's proposal on August 21.

Given that some of the states had been expressing concerns about the revenue implications of the proposal and their pitch for seeking compensation, there was nervousness about which way the proposals would go in the GST Council when it met on September 3 and 4. Questions like whether the Council would reverse some of the proposed changes to accommodate these concerns or even defer it till a more acceptable alternative emerges were quite figural.

Belying these apprehensions, the Council has exhibited statesmanship in fully endorsing what was inherently a sound and irresistible proposal promising meaningful simplification in the rate structure and real relief in tax burden to all constituencies that matter for providing either a consumption or growth impetus to the economy.

The Council has been sagacious enough both to recognise its merit as well as the need for its immediate adoption—implicitly parking revenue concerns till the proposal has played itself out in the economy. In the press briefing, the revenue secretary also chose not to characterise the revenue implications of the proposal (estimated to be about ₹48,000 crore by the government) as a "loss" owing to the positive impact the rate cuts would have on consumption and demand, thereby providing adequate buoyancy to collections.