Current GST regime is riddled with problems: Manpreet Singh Badal

Disappointed with the way goods and services tax (GST) has turned out to be three years down the line, Punjab Finance Minister MANPREET SINGH BADAL pressed for a complete overhaul of the federal indirect tax regime. He tells Dilasha Seth that in the absence of a vice-chairman in the Council from among the states, their agenda was not getting enough representation. Edited excerpts:

States were apprehensive about losing their autonomy to GST. What is your opinion three years down the line?

Before it was implemented I had said any GST is better than no GST. I genuinely believed in that. But, the way our GST has run, I have changed my belief. There isn’t a single problem that isn’t there in this GST. I am not saying this as I am in the opposition. There isn’t a single state that isn’t in deficit at the moment. Before Covid-19, GST and demonetisation are attributed to the slowing economy.

What is the key issue with GST according to you?

It’s been three years and still the returns are not finalised. My hunch is it will take another year for that. We have the one of the worst tax rates in the world. I have lost count of the tax rates that we have in GST. We are seeing adverse Authorities for Advance Ruling (AAR) rulings. Look at the number of people losing cases in AAR.

What have been your recommendations to fix issues in GST?

Punjab has given around 100 suggestions on GST and those have not even been acknowledged. The GST has a provision for a vice-chairman in the Council. They have not implemented that and the agenda is finalised without states being a part of that.

Are you saying that in the absence of a vice-chairman in the Council, states’ issues not getting the due attention?

There is a GST secretariat running, so there should be a vice-chairman from among the states who can pitch for states’ agenda. If you don’t listen to the stakeholders, you will not get the desired results. It is the toughest GST to comply with in the world.

Did you expect that the mechanism for compensation to states getting hampered in just over two years?

Punjab needs the highest compensation as one-fourth of our tax revenue was based on food grains, which got subsumed. It has structurally damaged Punjab. We went along with GST as it was in the highest national interest. But if I cannot meet my revenues, what do I do? My expenses are not getting met. After 2022, states will really get thinking about what to do. Once compensation stops, I can’t close schools and hospitals and can’t stop canals from running or close jails. I need money. I can’t disband my policy or stop electric plants.

What should be the priority in the fourth years of GST?

The first solution is acknowledging a problem, else we will never be able to find a solution. Present GST needs a holistic review. About six months will be needed to carry out the review — be it the rate structure or the IT backbone. If other nations can run it, so can we.