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Breaking the stalemate

Reports indicate that the crucial Goods and Service Tax Council meeting scheduled for November 25 to break the deadlock between the Centre and states over administrative control under the proposed goods and services tax (GST) regime has been postponed to December 2-3. Earlier this week, Finance Minister Arun Jaitley met with state Finance Ministers to break the stalemate but failed to arrive at a consensus on how Centre and states will control assesses under the new indirect tax regime. According to this newspaper, states like West Bengal, Kerala, Uttarakhand, Uttar Pradesh, and Tamil Nadu have insisted on exclusive control over small taxpayers, who earn less than Rs 1.5 crore in annual revenue, for both goods and services. 

Intended to subsume many of the Central and state indirect taxes, the GST Bill is expected to transform the indirect tax structure. Today, there are a plethora of taxes and levies imposed goods and services by state governments and the Centre, including octroi, excise and service tax. This places an excessive burden of indirect taxes on the common man. The current system taxes end-consumers and market stakeholders at multiple stages. By bringing most of these indirect taxes under one umbrella levy, the GST proposes to simplify the taxation regime and turn Indian into one large common market. 

As an ambitious overhaul of India's labyrinth of indirect taxes, the GST attempts to give business enterprises across the country a boost while also encouraging transparency. Its simplicity will significantly improve governance by creating a proper and straightforward paper trail of transactions across value chains, thereby reducing the scope for corruption and black money. Coherence and simplicity are the two virtues that businesses seek. This newspaper hopes that both sides arrive at a worthwhile consensus on the subject.
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