The India-GST marriage: Happily ever after or heading for a divorce?
As a young lawyer enters the corner office of her superior she is barely able to stifle a smile. She tells her superior that she is marrying a tax lawyer, albeit working with a competitor, the very next day. She invites her superior to accompany her to Bandra family court where she is planning register her marriage. The superior out of curiosity as well as common courtesy asks the young lawyer about her future husband. “Oh we just met today,” she replies casually. Not just that she goes on to avow how she met her future husband while arguing a case in court but adds that it was during the argument that she suddenly realised this was the man she wanted to marry. After a brief conversation over a coffee the same day both lawyers agreed that they must get married the tomorrow. It was after the marriage ceremony in the court got over that both the lawyers were seen discussing how do they plan living together. Whether they must buy a house or rent out a new one? How to tell the parents? Cut to a year later. The young lawyer again enters the corner office of her superior and announces that she is planning to divorce her husband. When asked about the reason she merely said, “We weren’t compatible.” This is apparently a real life story narrated to me by a tax partner in Deloitte. He told me that both his colleague and her husband were very good lawyers and came across as genuinely perfect for each other. “The problem was planning. Sometimes in life you need to plan, especially while taking big decisions,” he told me. “Same goes for GST,” he adds, quickly changing the topic. As the government rushes to implement GST (goods and services tax) one wonders if India is truly prepared for the new tax regime. And whether we are starring at a “happily ever after” or heading for troubles? GST would change the way tax—indirect tax-- is paid in India. This means a lot will change from the way tax is calculated to the way tax is paid. You would hear that taxmen are being trained for GST. In fact I myself have written an article or two on the topic. All of us may have heard the following quote at some point or other, in one way or another, on first day of our job: “It is one thing to sit in your class learning theories. But a job is a different ball game.” And yet our taxmen or revenue officers, who are set to handle and help implement and regulate GST—I fear— may not be prepared for the new tax regime. Not just that the government itself on one hand seems to be rushing towards GST, but is not giving clarity on many issues. Broadly GST rate bands have been announced but exact categorisation of goods and the exact rate that shall apply on a particular item under GST is not announced. Imagine the plight of Indian companies that have turnover of billions of dollars and they are not sure about tax they will pay three to four months down the line. This leads to uncertainty and speculation. And perhaps opposite of “ease of doing business.” I am confident Najib Shah, Hasmukh Adhia and Arun Jaitley are very intelligent people and may have already thought about every aspect of GST. But many in the industry are merely asking for a clarity and time to prepare for GST. Whatever your political views may be, but one thing is quite clear that GST is one reform that will help India. My only worry is that GST may face a lot of problems just because of our unpreparedness. And because of this GST shall be blamed. In fact I may go a step ahead. There are lobbies which want GST to fail: the lobby of those who deal in black money in one way or another. And you would be surprised how even some of the renowned businessmen secretly want GST to fail. And if GST has some troubles just because we weren’t prepared, the blame would go to the law and not our preparedness. Then we shall have some of the eminent economists blaming the GST for all the troubles. There is only one question many want to ask the government, “Why should a good reform like GST not succeed due to the lack of preparation?