Ease transition

Ajay Shah’s article “Beware of premature load bearing” (June 26) conjectures a greater likelihood of systemic failure of “fledgling systems” while facing a new level of stress emanating from cases of insolvency and the goods and services tax (GST) roll-out. The arguments centre on the justification of “load-bearing capacity” to the discretion and stakes of officials involved in the insolvency resolution and GST implementation.

It is quite ostensible that the “six” elements listed by him should be present in the insolvency and bankruptcy council to fight against the risk of “organisational rout” or any negative externalities being borne out of the system. A talented pool of legal professionals can expedite the process of insolvency resolution through an over-arching regulatory oversight. As the basic architecture appears to be sound, it is only about a fool-proof implementation as recourse for managing defaulted cases of both big and small under the aegis of the Insolvency and Bankruptcy Board.

In contrast, the multiple rates under the GST may create arbitrage opportunities due to “mis-classification”, as ice cream and yoghurt being a case in point. The GST council needs to be regulated by a unified Central Board of Taxes to triangulate between corporate income tax and the GST. Furthermore, real-time reporting with minimal errors, accountability and a dedicated board with the right composition and delegation of authorities can improve load-bearing capacity. Otherwise, “broken” architecture of the GST policy and administration may not be able to bear the load of a rapid transition from the old to the new indirect tax regime.

Kushankur Dey, Bhubaneswar

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