NK Singh calls for further simplification of the GST structure

The veteran policy advisor said that though GST was introduced in a record time, the next level would be to simplify the structure and minimise the cost compliance.

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Singh also called for a need for a far more credible policy for rationalisation of centrally sponsored schemes and central outlays that have been possible so far
MUMBAI: A further simplification of the Goods and Services Tax structure could help increase revenue and foster better tax compliance, according to N K Singh, chairman of the 15th Finance Commission, who also called for a better co-ordination between the finance commission and GST Council to better monitor, scrutinise and optimise revenue.

The veteran policy advisor said that though GST was introduced in a record time, the next level would be to simplify the structure and minimise the cost compliance.

“If you do not simplify GST, you will be defeating the purpose and intention of why we took this far reaching step of having a GST which enables better compliance, virtues for all stakeholders” Singh, said in response to question by SBI chairman Rajnish Kumar, after delivering the L K Jha memorial lecture at the RBI head-quarters in Mumbai on Friday.


“The cumbersomeness of compliance is one of the important factors why I believe there is a huge scope of improving the revenue realisation from GST. equally I do believe that the frequency with which the rates have been changed is unbelievable.”

Speaking on the general condition of state government finances, Singh highlighted the disparaity between the states in terms of their financial conditions. He also underscored that the states had their limitation on fiscal profligacy as their were bound by the Fiscal Responsibility and Budget Management (FRBM) Act stipulations, which restricts them to maintain a minimum level of fiscal deficit. Another external constraint is that they need Centre’s permission for excess borrowings.

Earlier, speaking on the theme Fiscal Federalism: Ideology and Practice”, Singh said that the symmetry in the working of the GST Council and the Finance Commission deserves serious considerations. The Finance commissions recommend distribution of revenues between union and the states and thereafter, among the states further to the third tier.
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They look at projections of the expenditure and revenue, but issue of GST rates exemptions, changes, and implementation of the indirect taxes are entirely within the domain of the GST Council. “This leads to unsettled questions on the ways to monitor, scrutinise and optimise revenue outcomes. Since both the Finance Commission and the GST Council are constitutional bodies, the coordination mechanism between the two is now an inescapable necessity” Singh said.

Singh also called for a need for a far more credible policy for rationalisation of centrally sponsored schemes and central outlays that have been possible so far

Aligning the Fiscal and Debt path of both the Centre and the States is an arduous but inescapable task. “A differentiated Debt path of States which recognises the present constraints and issues of legacy debt must be handled with sagacity and sensitivity ” Singh said

Singh also called for a re-think the design and structure of a genuine fiscal partnership which is not merely a race to garner more resources but a creative attempt to move towards a vibrant Indian Value Added Chain which can catapult India’s growth rate closer to the quest for double digit growth.
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