9th Aug 2018 THE HINDU Editorial Analysis ha ii
Going by the numbers: shortfall in GST r A member of the GST Council estimates a "shortfall" in the April-June quarter of this year at 43,000 crore and the collection trends released seems to defy logic evenue collection The SGST and the CGST are applied at the same rate on the identical tax base. Logically, the two levies should yield equal revenue collections. But SGST collections over the past several months have been consistently exceeding CGST collections Then, in April, the beginning of this financial year, both CGST and SGST collections dropped and Integrated GST (IGST) collections took off.
....sharply. In each of the months since then, IGST collections have overshot CGST and SGST collections Insecure over loss of fiscal autonomy, the States succeeded in pressing a GST that is made of two types of levies, the CGST and the SGST. The Constitution empowers the Centre to tax sales anywhere nationally, but it allows a State to collect taxes only on sales within its territory So, all 29 States and two Union Territories with legislatures have separately enacted their respective SGSTs. The SGSTs have almost identical features and rates -to prevent simultaneous tax across States but in effect, they are distinct SGSTs. This complicates the collection and refunds processes and system The GST is being levied at the point of consumption, not the factory gate,
....unlike many of the levies it has subsumed. Given the territorially limited tax jurisdictions of States, the collection of the SGST poses a problem every time goods and services get sold outside the State they were produced in The solution that has been worked out to overcome this problem is the IGST which is imposed on inter-State sales Logically, the IGST ought to be imposed as a substitute for the SGST such that the GST equals the SGST plus CGST for intra-State sales and IGST plus the CGST for inter-State sales. In practice, needless complications have been introduced into the IGST GST [Intra-State] = SGST + CGST GST [Inter-State] IGST CGST
On inter-State sales, the IGST, at a rate equal to the applicable CGST and SGST, is levied. This means, despite its national tax jurisdiction, the Centre has confined the levy of the CGST to intra-State sales A selling dealer in an exporting State collects the IGST from the buying dealer. The GSTN credits it to the IGST account. Of this, the part corresponding to the CGST is transferred immediately to the Centre. The balance is not all SGST revenue. It includes amounts to be refunded through a settlement process that can take months Some of the refunds are on account of input tax credits that the purchasing dealer in the importing State draws from this balance. (Tax paid on capital goods that go into making final products is supposed to be fully set off. This is to avoid cascading taxation.)
Because the IGST collection and refunds system is ungainly, estimating GST revenue cannot be a straightforward exercise. Although it is confus d to be so, not all the IGST collected is GST revenue To avoid exporting taxes, no GST is to be levied on exports out of India. n practice, despite their GST-exempt status, exporters first pay the IGST and then it is refunded back to them. The excuse for this convoluted system is the need for a way to refund the input taxes exporters pay on components In effect, the GST system processes a whole set of IGST payments only to refund them, something that's not followed internationally. Suppliers to exporters and SEZs are compulsorily required to register in the GST system even if they do not fall in the GST threshold. This has needlessly increased the working capital and compliance costs burden on exports
The recommendation for introducing a GST had first come in 2004 fro task force formed by the Vajpayee government under economist Vijay Kelkar. The current government has consulted Mr. Kelkar on the GST, but has not accepted his recommendations on an alternative IGST system compliant with global norms m a The proposed IGST would be simplified as a substitute for SGST in inter- State supplies, and exporters, while not subjected to the IGST, would be truly zero-rated
Reforming the civil services o A recent move by the Centre seeking applications from 'outstanding individuals' to fill in 10 posts of Joint Secretary has caused worries. Many serving Indian Administrative Service (IAS) officers see this move as threatening their hegemony. Some retired officers and political opponents consider this as the beginning of the end of a "neutral and impartial" civil service with the likely induction of loyalists to the current dispensation o It has also been argued that this marks the "privatisation of the IAS". Doubts have been expressed if private business houses would "plant" their people in order to influence government policie:s o In our Cabinet system of government with collective responsibility, the cabinet secretariat plays a crucial role
. Higher bureaucracy in the secretariat often has to examine proposals received from specialised departments/corporations (say, the Central Public Works Department, Central Water Commission, various Central Water ubictound public sector undertakings, manned largely by technical experts), and in consultation with other ministries/departments like Finance, Personnel and Law prepare a cohesive note to facilitate the Minister concerned or the Cabinet to take a final decision been formulated. How to steer a proposal through this elaborate system requires both expertise and experience. A final government decision is obtained, after the file moves through this long internal and hierarchical process, when the proposal is approved . The key officials in the secretariat, from the Joint Secretary to te
..Secretary, are the point persons guiding this consultative process and advising the political executive to take a final call. How an abstract idea is to be given a concrete, implementable shape is one key duties of such officers A Joint Secretary to the government has this crucial "line" function to perform in policy formulation and its implementation. Though the original proposal is often prepared by technical experts and sent to the "government", the final decision rests with the Joint Secretary/Additional Secretary, the Secretary and finally the Minister/Cabinet o The question often raised, in this context, is whether the higher bureaucracy is equipped to comprehend complex economic and technical issues in order to properly aid and advise the Minister. Can a career civil servant, recruited through a tough competitive examination, cope with...
..Technology, Scientific and Industrial Research, Health Research, and Agricultural Research have always been scientists of eminence. Similarly, in departments like the Railways, Posts, etc., all senior positions are manned by Indian Railway or Postal Service officers. Therefore, there is nothing very original in the new initiative to allow entry at the level of Joint Secretary One perceived fear is that the number of such lateral entrants may be increased with time and that the political leadership, by creating a 'divide and rule' mechanism, would further demoralise the 'steel frame of governance' . The second related fear is that in the garb of recruiting outstanding individuals, politically indoctrinated persons will be inducted into the system. These fears could have been allayed by letting the Union Public....
Decoding the DNA Bill The DNA Technology (Use and Application) Regulation Bill, 20 introduced in India's Parliament this week, with a view to creating national DNA database for solving crimes and identifying missing persons as been Creating large databases is often not a cost-effective way to solve more crimes, and limited resources must be targeted effectively The Forensic Genetics Policy Initiative published its report, "Establishing Best Practice for Forensic DNA Databases", last year after extensive consultation and a review of policies worldwide Using DNA effectively during criminal investigations requires proper crime scene examination, trained and reliable policing, a trusted chain of custody
must be fully informed about future storage and uses of their information before they give consent . The Bill allows two categories of persons to have their DNA collect without consent and their DNA profiles added to the database. These are persons suspected of any offence, where an order is made by a magistrate, and persons suspected of more serious offences, where an order from a magistrate is not required o Who should be included in the database, and whether a court should always have a say, is an important matter for national debate. However, there is no attempt to assess the cost effectiveness of these provisions or to estimate the database's likely size The financial memorandum to the Bill estimates that there will be a one-off
.cost of Rs. 20 crore to set up the database, with annual costs crore to maintain it. This is completely unrealist c: for compari National DNA database cost 3.7 million to run in 2015-16. Int evidence shows that the success of a DNA database is driven primarily the number of crime scene DNA profiles loaded on to it, not by the 5 number of crime scene DN is number of DNA profiles from individuals, so proper crime scene analysis should be the top priority
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