The Goods and Services Tax Council reportedly wants to discourage ad hocism in rate revision and outright exemptions. This makes sense. Frequent changes in GST rates or outright exemptions that break the GST chain mess up the tax system, and go against the grain of the new tax system to make production efficient. It is also absurd to have different GST rates for the same kind of product as the divergence would only spawn classification disputes. The rates range from 5% to 28%, excluding the cesses. The rates must converge to encourage compliance and tax buoyancy going forward. A uniform GST of 14% would be revenue positive after subsuming many indirect taxes.
The larger point is to have a simple and neat tax system to reduce compliance burden. The GST Council has tried to ease the transition pain for small taxpayers and exports with incremental policy changes, but much more needs to be done. Manufacturers and service providers with operations in several states, for example, are required to register at multiple locations. The regulation says that for each state, the taxable person will have to take a separate registration, even though the taxable person may be supplying goods or services or both from more than one State as a single legal entity. The inability of states to share registration data is baffling. Taxpayers can be given the option to register centrally (with an all India footprint), and the registration can be shared by the GSTN with the states concerned. A common unified registration framework will make compliance simple for a business agent.
The GST Council has deferred the applicability of the e-way Bill to track movement of goods till next April. Dispense with the e-way bill. After all, no GST on inter-state sale of services is collected without the help of any e-way bill. A modern tax administration must minimise interface between the tax department and the taxpayer, and instead make intelligent use of technology to curb tax evasion. New rules should come into force three months after they are notified to make the transition less painful.