"GST Simplification Is Major Step Forward": Amitabh Kant On Tax Overhaul

Rationalisation of GST slabs - they were brought down from four to two late last night, and several goods and services were also exempted - will lead to increased demand that will, in turn, push for greater investment as manufacturers ramp up production to meet that uptick, Amitabh Kant, the former CEO of government think-tank NITI Aayog, told NDTV Thursday.

Mr Kant told NDTV there are several other "remarkable" points about the GST Council's announcement, which removes the 12 and 28 per cent slabs in favour of the five and 18, which sources said had contributed 74 per cent of tax revenue collected over the past eight years.

On Wednesday, the first day of the GST Council's 56th meeting, also approved measures to ease burden of compliance on businesses, and also reduction of GST registration time.

"I would say the simplification of GST (2:05) is a major step forward. First, not merely the reforms and simplification but the fact it will have a huge impact across several sectors. And, in the context of the present, the tariffs imposed by the United States - which impact our energy security and our strategic autonomy - require a vast range of radical reforms," he said.

"It is to the credit of this government that it has pushed this through in a quick manner and this, is to my mind, is remarkable," Mr Kant said. He also urged the government to not let up, saying, "It should be accompanied by reforms in other areas, such as ease of doing business."

On the opposition saying the rationalisation was long overdue, Mr Kant said the GST framework is a complicated endeavour that requires the consensus of all state governments.

"Bringing in that consensus is not an easy job. The fact we replaced a vast number of taxes... close to about 28 taxes and a vast number of cess... into one tax, that itself was a big reform."

Earlier today Congress chief Mallikarjun Kharge said the 'one nation, one tax' tagline - with which the GST system was launched in 2017 - had been twisted into 'one nation, nine taxes'.

And P Chidambaram, who was Finance Minister four times, said GST rates prevailing till last night, when they were rationalised, ought not to have been introduced in the first place'.

"I think we've taken the right step right now and I would say it is a great administrative move forward. It demonstrates great political will to confront challenges the economy faces," Mr Kant countered, referring specifically the 50 per cent tariffs imposed by US President Donald Trump.

The tariffs themselves - which include a 25 per cent levy on Indian exports for buying Russian crude and military equipment - are a "huge opportunity for India to reform itself", he said.

"When you're confronted by a 50 per cent tariff by a country which accounts for 26 per cent of the global GDP, and to which you export almost $90 billion worth of goods... you need to take a vast number of measures and internal reforms," Mr Kant said.

However, the ex-NITI Aayog chief also warned "we need to do many, many more things", including accelerating the pace of reforms and creation of jobs in the manufacturing sector.

"... long-term consumption cannot be driven only through GST. It needs the creation of good quality jobs and that will happen when we give a thrust to manufacturing. And manufacturing will happen when we are able to reduce the cost of energy... the cost of logistics... and when we are able to ensure that our entrepreneurs are able to be globally competitive."