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On Day 1 of GST, Opposition claims it will finish small and medium traders

Akash Bisht | Updated on: 1 July 2017, 22:06 IST
(Arya Sharma/Catch News)

The Goods and Service Tax (GST) was unveiled with much fanfare in a grand ceremony held at midnight in the Central Hall of Parliament by Prime Minister Narendra Modi.

Despite the hype, the new tax regime has created utter chaos in markets across India, with the trading community almost clueless about the various provisions of the new law.

Ill-prepared govt

Though it was a collective decision of all political parties, many in the Opposition, on the first day of the new regime, accused the government of ill-preparedness and unnecessary haste. Senior leaders of Opposition parties were unanimous about how markets across India woke up amid confusion and chaos, with no clarity on GST's multiple provisions.

They claimed that GST would leave no space for small and medium traders in the organised, and particularly, the unorganised sector, and they may not survive this second assault after demonetisation.

“No one knows what purpose was achieved with the decision to ban high currency notes. Similarly, a hurried GST too would create chaos amongst the traders who may take months to understand the finer details of this new system. The government should have provided training to these traders, so that they could be prepared for such eventuality,” said Bahujan Samaj Party (BSP) leader Sudheendra Bhadoria.

Calling it a self-promotional scheme of the Prime Minister, Bhadoria added that the way it was launched created doubts in one's mind about the intentions of the government. “It is a national scheme, and not a self-promotional one as being made out by this government. We support GST, but not the way it is being marketed as an achievement of one man, one party. Since its inception, it was a collective effort, and no one individual or party can take credit for it,” he added.

Ironically, the Janata Dal (United), which many have speculated is swinging towards the ruling NDA, severely criticised the preparedness of the government in launching such an ambitious tax regime. JD(U) leader KC Tyagi claimed that for the ruling dispensation, India lies only in Delhi, Mumbai, Chennai and Kolkata, among a few other metros, and the reason why no heed was paid to the information technology component of GST.

“India is a backward country and most of the population here do not know much about computers. And here is a tax regime where everyone has to file their taxes online. How will the small traders, particularly in the unorganised sector, deal with computers? Moreover, in most parts of rural India, there is no electricity or internet connection. The government should have first made provisions for that or provided them some sort of training. But none of that happened,” Tyagi pointed.

According to him, the small trader would be adversely hit amid this chaos and confusion.

Harsher penalties

Most leaders raised apprehensions about the harsher penalties, including jail terms, for defaulters. This, they believe, has created fear in the minds of the traders.

Highlighting this particular provision, Congress leader PL Punia hypothetically said: “What if someone starts a new business and falters in his tax payments? He could be jailed. Earlier, it was only about cash penalty, while now one can land in jail for a silly fault.”

Highlighting the government's unpreparedness, Punia highlighted how changes were made at the last minute, including reducing the tax rates on fertilisers and even tractor parts. Fertilisers rates were brought down from 12% to 5%, and rates for tractor parts came down from 28% to 18%.

“Just imagine: they had put tractors parts and those of luxury cars in the same bracket. In a hurriedly called GST Council meet, these rates were brought down, which yet again reflects poorly on the government's preparedness. They could have waited for a few more days, but they were more concerned about making a tamasha out of it. Moreover, GST will result in price rise, which is going to hurt the poor,” said Punia.

Majid Memon of the Nationalist Congress Party, too, conceded that if the government could have waited for a fortnight, the chaos and confusion could have been minimised substantially. Memon claimed he was not very convinced with the praises showered by Union Finance Minister Arun Jaitley, and pointed out how the small trader was still not aware of the complications.

“On the first day, traders and even the common man is not too exited about GST. In fact, a certain gloom has descended over markets that are still recovering from the note ban exercise,” he said.

Not 'one nation, one tax'

Uday Veer of the Samajwadi Party pointed at the arbitrariness of GST, and asked why petrol and liquor were kept out, if GST was indeed about 'one nation, one tax'.

Claiming that the country is not yet ready for GST, he said that tax rates on luxury items should have been high to ensure the poor weren't burdened by taxes. “This government is anti-business, which reflected during note ban. The economy is anyway crawling, and this will worsen the situation. We still have time to study the full impact of GST, and the true picture will emerge in the next few days,” he said.

The Budget Session of the UP Assembly is set to commence on 11 July, and that is when SP will take up this issue.

Software glitches

Rashtriya Janata Dal spokesperson Manoj Jha narrated his experience, outlining how traders in Delhi were clueless about the various provisions of GST, which were made worse by software glitches. All this made doing business impossible on the first day.

Jha said: “There is so much confusion about the rates. Howsoever you might criticise Congress, but they wanted to bring down the rates down. The government is shamelessly pursuing a neo-liberal agenda. This is just a way to finish small traders. While big businesses have a lot of space to cover and recover, but small business have no such scope.”

First published: 1 July 2017, 22:06 IST