Delhi Finance Minister Manish Sisodia on Wednesday said that the current form of Goods and Services Tax (GST) could give a rise to black market and “inspector raj” because of its higher tax slabs, which will trigger lower compliance.
Expressing concern on the higher tax rates decided for different commodities and services under the GST, Delhi Deputy Chief Minister Sisodia said he had been pushing — both within and outside the GST council — to follow the formula of “lower the tax rates, more the compliance”.
“I fear that the compliance will be lower in GST’s higher tax slabs of 18 and 28 per cent. Anyone who is going to buy an item listed in the category of 28 per cent tax slab, could opt for purchasing goods without bill to evade tax and save money,” Sisodia said, adding that “in this manner, GST could give a boost to black market and ‘inspector raj'”.
Speaking at an event ‘Ease of doing business and GST’, which was organised by the PHD Chamber, Sisodia said the GST in its current form should not be referred as big tax reform of independent India because for that you need a big decision=making power.
“You cannot call it a big reform only by saying that we replaced VAT with GST. It’s a mathematical change only,” the Minister said.
The Aam Aadmi Party (AAP) leader said that GST was a good concept but large-hearted decisions which should have been taken to make it a big tax reform, were not taken.
“If we could not implement ‘lowest the tax rates, more the compliance’ formula, then what is big in it. We missed this big opportunity (to convert GST in a big tax reform),” Sisodia said.
“I have disagreement over several points in the current form of GST. I am not opposing it but flagging the points that India need to take care of while celebrating GST,” the AAP leader added.
He said there should have been only two tax slabs — zero tax and 12 per cent tax in GST.
Sisodia said the Delhi government never increased tax rates even on a single item. Instead, it reduced taxes on various items from 12.5 per cent to only five per cent.
“If you believe in the tax reform and in the theory of ‘lower the tax rate, more the compliance’, then you have to show it,” he added.
PHD Chamber President Gopal Jiwarajka also expressed concern on higher tax slabs and said that “(tax) rate rationalisation” should be done as soon as possible.
“GST is a reality and now it is a need to make it good and simple tax regime,” Jiwarajka said.