GST must go back to drawing board; rates need to be simplified: N K Singh

The goods and service tax (GST) needs to be taken back to the drawing board and simplified, the Fifteenth Finance Commission Chairman N K Singh said on Tuesday.

“GST needs to go back to the drawing board. We need simplicity of rates. Whether one rate or not is a matter of debate,” Singh said, adding in its current form, GST had made compliance very difficult.

Singh was speaking at the launch of a book by former Finance Secretary Vijay Kelkar and economist Ajay Shah. In a chapter in the book, the authors have proposed a single-rate GST of 10 per cent.

Kelkar said at the event that given the present situation in the Indian economy, reviving growth was far more important than anything else in meeting various objectives. Shah said that at the current level of state capability in India, it was better for the state to do fewer things but do them well. The event was also attended by former Prime Minister Manmohan Singh, who did not speak.

Additionally, a Fifteenth Finance Commission source said on Tuesday that the final report of the Commission will have a big chapter on GST.

“There will be a big robust chapter on GST in our final report. We have very vital things to say about how the revenue behavior takes place. So from this point of view we have a strong stake in how future of the GST pans out,” the official said.

The official said that GST needed to be revenue neutral and that the GST Council needed to move from multiplicity of rates to one standard rate. “A huge amount of simplification of procedures is needed to make compliance easier for a small scale industry guy, so that he does not have to employ a chartered accountant to fill forms. You also need to give it predictability and certainty because you cannot have predictability if you have many changes,” the official said.