The GST Challenge.


The GST council has been given the ultimate responsibility to bring the biggest tax reform of India-the GST act- to reality. But, there has been a lot of concern about its structure and functioning , most of which has revolved around the Centre-State relationship, like :

1) The provision of Centre reserving 33% voting rights in a council requiring 3/4th votes as majority gives a veto power to the centre.  Thus, fear of centralization exists.

2) Since the tax collection ambit will expand, it will affect poor, the most and the states no longer have the autonomy to frame policies to secure their interests based on regional priorities and requirements.

3) The bill takes away taxation of Goods from states permanently, thereby increasing the financial dependence on centre via grants/loans/aids.

4) Despite parity in GST council there is a risk of loosing out in case same party rules at the centre and the state compromising regional needs against party politics.

Though there seem to be many challenges in front of cooperative federalism in respect to the structural implementation of GST, however the necessity of a long wished common taxation system and a common pricing structure for commodities has definitely been  fulfilled.

Considering its infancy, utilitarian vulnerability and challenging structure, the implementation needs utmost care with active feedback support from all the stakeholders to make it more successful. The Centre having the largest stake, should work with an open-door policy and an inclusive mindset for the bill to have a positive effect on the Society, States and the Centre.


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