Topic: Indian economy : Issues
5) Having a standard GST rate for majority of goods will make GST much simpler and take it closer to the idea of one nation, one tax. Critically analyze.(250 words)
Why this question
The article discusses the recent decision by GST council to prune tax rates on various items and the announcement of the vision of our PM to have 99% of goods in a single tax slab. The idea of having a single rate for majority of goods was one of the initial promises of GST reform. The idea, however, needs to be analyzed in depth to understand its implications.
Key demand of the question
The question expects us to bring out the vision of having a standard GST rate, highlight the steps taken off late to achieve this and the pros and cons of such a measure. Finally, we have to provide a fair and balanced conclusion and discuss the way forward.
Critically analyze -When asked to analyze, you have to examine methodically the structure or nature of the topic by separating it into component parts and present them as a whole in a summary. When ‘critically’ is suffixed or prefixed to a directive, all you need to do is look at the good and bad of something and give a fair judgement.
Structure of the answer
Introduction – Highlight the recent step of the GST council and the vision of PM.
- Discuss that GST was initially promoted as one nation, one tax, and one market. Thereafter, GST council decided to have multiple rates to take care of revenue losses, make indirect taxes more equitable and progressive etc
- Analyze the advantages offered by having a standard tax rate such as ease of tax administration, simplified taxation structure etc
- Discuss the issues that a standard rate might lead to – concerns related to revenue losses of the state, make the tax less progressive etc
- Discuss how such issues can be resolved such as through centre’s assurance to state regarding funds transfer, having demerit and luxury goods in higher tax bracket etc
Conclusion – Give a fair and balanced opinion on the need for a standard GST rate and discuss the way forward.