Will the next phase of reforms pave the way for even fewer rates and stable GST revenues?
Conceptualised by former Prime Minister Atal Bihari Vajpayee in 2000, it took more than 17 years of discussions and negotiations between the Centre and states for goods and services tax (GST) to finally see the light of day. Subsuming as many as 17 large taxes and 13 cesses at central and state levels, the implementation of GST from July 1, 2017, was seen as a combination of political wizardry and sound economics.
After all, making all of India’s 29 states and seven Union territories (at that time) give up a large part of their fiscal autonomy and launch the One Nation One Tax, with different political parties helming different states, was no easy task.
Some of that strain was visible in the political compromises that were struck in light of concerns over income inequity, since the initial iteration of the tax would have meant taxing both essential goods and super luxury and sin goods at the same rate. In the end, the GST was rolled out with a five-rate structure and several exclusions both in terms of sectors and taxpayers.
