The 2-year anti-profiteering clause will only be used as a Brahmastra - a weapon of last resort, said Kaushik TG, officer on special duty to the GST Council in an exclusive interview to BOOM. Speaking on the sidelines of a GST seminar organised by PhilipCapital India in Mumbai, Kaushik dismissed concerns of the industry of a likely return of Inspector Raj through the anti-profiteering clause and said those who maintain book of accounts have nothing to worry. The anti-profiteering clause provides the government with a provision to monitor companies and sectors where the benefits of GST have not been passed on to the consumers.
Kaushik TG addresses several other queries through this Q&A with BOOM's Jency Jacob.
Q) As we cross a fortnight of the implementation of GST, what are your first impressions?
It has actually been worthwhile to be part of a huge body and with eminent team, such seniors to guide us and many of us as youngsters given the opportunity to be a part of this team. We are very happy to see this up and running. It's been two weeks now and we have got a lot of positive feedback. We will take it forward from here.
Q) You are meeting a lot of industry representatives. What are the three key concerns they have about GST?
We are hearing some issues about migration and registration but if you look at the numbers, you will see we are addressing most of it on a real time basis. We are also hearing about the awareness of rates- which items come under which category. But again we have made it pretty clear and we have also released a rate app on a mobile application. Also on the website of Central Board of Excise and Customs, you can search items by their rates. So as and when we are hearing feedback, we are taking pro-active measures to address it so that people are comfortable with the new tax regime.
Q) Large corporates have expressed concern about the 2-year anti-profiteering rule and whether it will bring back the Inspector Raj era? How are you assuring the industry about this?
Like my revenue secy has consistently said, that this will be more like a Brahmastra and it is a more like an enablement provision that we want but we will try to ensure that we don't have to use it. But we as a government have to ensure we have the power. There is no doubt that GST is going to provide a lot of benefits to the businessmen in terms of credit availment and utilisation and there is definitely going to be some amount of financial benefit that he will get. We as a govt are also responsibile to ensure that there is no undue adverse impact on the common man like inflation. We are not imposing any additional burden on the business and asking them to absorb it. But we are telling them that whatever benefits they get have to be passed on to the common man otherwise the flow will get affected. Our position has been that as long you are clear in your books of account why do you have to worry about any kind of licence. Our whole thing is to move from this licence and Inspector Raj era to a very scientific and electronic based system. It is going to be used as a last resort. But as a government we have to have this power.
Q) Any sector where you feel you may have to use this Brahmastra?
No sectors as of now which i am aware of. Any sector where we feel impacts the public we will use it. Nothing as of now.
Q) One big criticism that we have often heard about GST is whether the country was fully prepared in terms of its implementation on July 1. So was the Govt fully prepared to implement a massive tax reform like this?
Well I really dont think and look at the scale of the taxation reform. Even standalone GST is a huge taxation reform and whenever it comes there will always be implementation issues. So as it is GST is a big deal. Look at all the countries where they have implemented GST and it has been a big deal wherever it has been implemented. Now look at a country like India that is equivalent to all these countries put together and you can never be prepared for a reform like this so that you say, now we are ready. We were very sure we will be able to carry it through and we have done it and it has been two weeks now and we have carried it forward in a very positive manner. There are minor teething issues and we are proactively taking steps to address it.
Q) We have also seen lot of protests in recent times from traders. Do you think this noise is also largely due to many of them not being part of the tax net before July 1?
I think you can definitely say that one of the stated aims of GST is to bring more people into the tax net. Initial indications show that there are many people coming into the tax net who were earlier not part of it. So it is possible that a lot of noise is also because of this.
Q) But is it really one nation one tax regime considering we have kept some key items like petroleum and alcohol out of this system?
I still stand by the statement that it is one nation one tax one market. There are some items like petroleum, alcohol for human consumption that have been kept out of it. These are very few items and very sensitive in nature which the states are particular about. But you look at the rest of the items which are the main items we consume on a daily basis- you go from Kashmir to Kanyakumari wherever you go you have to pay the same tax on all these items. So we are clearly one nation one tax.
Q) What are you hearing from the states. Are they fully on board now?
See being on board and having concerns are two different issues. All the states are completely on board otherwise we wouldnt have come so far. But there are concerns that everybody has- taxpayers, states, department do have - but these are things that have to be expected. We are addressing them as and when we have the opportunity.
Q) One key concern is that technology is not affordable as the scale of business may not be big for small traders who were not used to such documentation? How is the council working to bring down the cost of compliance?
We have made it very simple overall. The basic utility that we have prepared is just part of your overall office package. You just have to fill the excel sheet and upload it at the end of the month. So it really cannot get simpler than this. Also we have GST Suvidha providers or GSPs who are accredited or empaneled by the GST Council and they will actually be able to help and handhold, even the dept will handhold the taxpayers to ensure the migration and transition is smoother.
Q) In recent weeks we have heard lot of criticism on the fitment of items. 3% on gold, 18% on tampons and tissues while 28% on washing machines. This at a time when we all agree that gold consumption needs to be brought down to keep the country's current account deficit in control. Your views.
Entire fitment of exercise have taken place in a scientific and practical manner. Underlying principle is that the tax revenue of the government has to be protected. Also the net incidence of tax on these items should remain the same so that there is no additional pinch the common man has to feel. We have followed these principles.
Q) What are your estimates on the additional tax revenue that will come through GST?
Overall without even getting any new taxes and simplifying business, this itself will significantly boost the country's growth. No estimates as of now on the additional revenues.
Q) Several estimates about a jump in GDP by 2% once GST fully implemented. Does the GST council agree?
GDP estimates range from 1.5-2.5%. But as a member of the GST Council, I cannot comment on that. Our duty is to ensure it is implemented properly and taxes are collected.