Recent buoyancy in Goods and Services Tax collections should be used to usher in reforms in the tax system. Analyse (200 Words)
Refer - Business Standard
Enrich the answer from other sources, if the question demands.
IAS Parliament 2 years
KEY POINTS
· The idea of compensating the states was mooted to provide necessary financial comfort to the states, who were apprehensive of a fall in their revenues.
· After all, the states were giving up their exclusive right to levy many taxes including the one on goods under the value-added tax (VAT) system that had been introduced from 2005.
· The idea was that the revenue from the cess would be used by the Centre to repay the loans.
· Remember that the continuation of the cess beyond five years in the current form has affected the GST rate architecture.
· The beneficial impact of an early reduction or withdrawal of the cess on inflation would also be significant.
· It is, therefore, necessary for the Centre and the states to examine closely how soon the enhanced cess collections in the coming months could help early repayment of the loans and end the levy.
· This will be an opportunity for the GST Council to introduce the much-delayed rate rationalisation, removal of exemptions and reduction in the number of rate slabs.
· With buoyant revenues, this will be an opportunity for effecting the much-awaited reforms in the GST system.
· Rationalising rates and reducing bands can further sustain the revenue growth that is already in evidence. Wasting this opportunity would be a costly mistake.
K. V. A 2 years
Kindly review
IAS Parliament 2 years
Good attempt. Keep Writing.
