Following are the Suggested Answers for Mains Marathon, April 6:
- Examine the problems in the implementation of GST regime. Also, discuss the reasons why CAG can’t audit GSTN.(GS 3)
जीएसटी शासन के कार्यान्वयन में समस्याओं की जांच करें। साथ ही, सीएजी क्यों जीएसटीएन का ऑडिट नहीं कर सकती है?
Problems in the implementation of GST:-
- GST is quite different from the existing indirect taxation system in the country. For effective implementation of GST, tax administration staff – both at central and state levels – would require to be trained properly in terms of concept, legislation and procedure.
- The tax administration staff would also need to change their mindset, approach and attitude towards the tax payers. And for this, they would have to ‘learn, unlearn, and relearn’ the GST not only in letter but in spirit too.
- Integrating all taxes levied on goods and services in a federal country with clear cut distribution of legislative powers, like India, is undoubtedly, a mammoth task.
- Design issues:-
- Though the broad design of the GST is firmed up, specific issues like threshold limits for goods and services, exemptions, definition of supply, determining the place of supply of goods and services, transition provisions for existing exemptions etc. need to be carefully identified, analysed and appropriately addressed
- IT Infrastructure:-
- The factor will impact the success of GST is the robust IT backbone connecting all state governments, trade and industry, banks and other stakeholders on a real-time basis.
- The process of tracking interState transactions will be extremely complex and will require an infallible IT system.
- The clearing house mechanism envisaged in the dual model GST will handle humungous data.
- Revenue Neutral Rate (RNR):-
- At present States are charging VAT @ 0%, 1%, 5%, 12.5%/13.5% and 20% besides other levies. Similarly, Centre is charging central excise duty @ 12.5%, CST @ 2%, service tax @ 14%. RNR rates are a point of debate and will be one of the final issues for consensus between the Empowered Committee and the Centre.
- Statutory Requirements:-
- As the imposition of GSTwill be delegated to both state and central government, the constitution has to grant powers to both through an amendment. It is seen as a difficult task as the law expects at least two-thirds majority from the members of the parliament and that isn’t easy given the current political scenario of the country.
- Make-shift Arrangements:
- State governments are demanding compensation from the central government as they foresee a major dent in the revenue due to CST losses. This is asked for the first 5 years after the implementation of GST, for which the central government has agreed to 3 years. A final conclusion is yet to be drawn.
- Framework For Tax Disputes:
- There has to be a uniform legal procedure for tax disputes and litigations to avoid any confusion.
- Defining Inter-State Transactions:
- With the transportation services available everywhere, the place of sale and consumption may not be the same. This makes it difficult to go forward with revenue allocation. Hence, it becomes important to define procedures to tackle such problems.
- Infrastructure for The Collection Process:Proper infrastructure has to be designed to track the movement of goods and services between states, collection and monitoring revenue, identify defaulters etc.
- Determiningg GST Rates:This is a major step in ensuring the success of GST. Arriving at rates which are conducive to both the government and public is will be a daunting task.
- Currently, goods and services may be taxed at different rates across states owing to geographic, economic and cultural reasons.
- For example, coconut oil is taxed in Kerala at 5%, while in Uttar Pradesh, it is taxed at 12.5%., Therefore, taxing each good and service at a particular rate will be a complex exercise as they cannot simply be moved to the nearest slab rate.
- Disadvantage of a multiple rate structure is that it could lead to disputes on classification of goods and services.
However the government has already incorporated an SPV viz. – Goods and Services Tax Network (GSTN), which has to develop a GST portal – front-end system for trade and industry and back-end system for all government agencies.
- GSTN will ensure technology support for registration, return filing, tax payment, IGST settlement, MIS and other dashboards on GST portal to all the stakeholders.
Can CAG audit GST?
Yes it can:-
- In the draft Bill the role was restricted, which has been dropped in the final Bill after the auditor raised objections with the finance ministry.
- The audit of the GST regime will be like any other audit of government department, state or central, and no party can claim exemption.
- The CAG has pointed out in official communications in recent times that under the new Companies Act, GSTN can be counted as government-controlled company since its strategic control will be with the government. Like any PSU, the CAG could depute chartered accountants to audit GSTN
- Accessing the data at various points point of manufacture, point of sale etc. would make the GST audit a complicated and almost impossible task, and will hamper other functions, which would include CAG certification about the share of GST for States.
CAG can’t audit because:-
- An official pointed out that the GSTNhas refused to give the CAG access to its network, saying it is only holding the data in a fiduciary capacity since the tax data originally belongs to the Centre and States.
- Officials also pointed out that the GSTN is owned by a private company, and thus cannot be audited by CAG.
- GSTN has said that it is just a pass through portal and CAG must approach CBEC and States to get original data filed by taxpayers.
Therefore centre should make it clear and enable a transparency mechanism where CAG does not overstep it’s powers and at the same time public interest is guaranteed.
रिकॉल चुनाव कैसे काम करती है? भारत में रिकॉल चुनाव रखने के कारणों पर चर्चा करें।
Right to recall:-
- A recall election is typically a process by which voters seek to remove elected officials through a direct vote before their term is completed.
- In a first-past-the-post system in a democracy, unfortunately, not every elected representative truly enjoys the mandate of the people. Logic and justice necessitate that if the people have the power to elect their representatives, they should also have the power to remove these representatives when they engage in misdeeds or fail to fulfil their duties. There exists no recourse for the electorate if they are unhappy with their elected representative.
How does recall system work?
- RTR law will be implemented if majority of Indian citizens display their support via TCP (Transparent Complaint Procedure) law.
- This transparent complaint procedure provides transparency in recalls and will ensure that the citizens` complaint is visible and verifiable by anyone, anywhere, and anytime so that the complaint cannot be suppressed by the politicians, officials, judges, or the media. This procedure will ensure that the evidence is not suppressed.
- Filing an application to circulate a recall petition, circulating a recall petition, gathering a specified number of signatures in a limited period, submitting petitions to election officials for verification of signatures and when if sufficient valid signatures are presented, a recall election is held
Why India needs a right to recall :-
- It must coexist with the right to vote in order to deepen our democratic roots.
- Having such a right offers a mechanism to ensure vertical accountability. Such a right would be a significant check on corruption along with ongoing criminalisation of politics.
- Having a process to recall could also limit campaign spending, as morally skewed candidates weigh the risk of being recalled.This right would help engender direct democracy in our country, broadening access and raising inclusiveness.
- Recalls have become a popular tool of grassroots activism in an age of extreme political divisiveness.
- Due care must be taken in the introduction of legislation associated with such laws.
- California’s gubernatorial recall elections are notorious for the influence of special interests, with Governor Davis’ recall vote, in 2003, a classic example.
- Another problem with recalls is that a lot of the recall efforts costs money .
- Also, some politicians could use their positions to abuse the systemand by making their supporters file Recall petitions on political opponents and on even those who are sincere.
- In some cases, this recall election might be used as a tool to influence and blackmail politicianswith the fear of recall to influence decisions a certain way.
Thus, trust grows in people and people will actively get involved in the voting process which is the fundamental right, compared to what happens now which is a poor turnout for the elections.
- Mention a few characteristics of Universal Basic Income. What are the issues in the implementation of Universal Basic Income in India?(GS 2)
यूनिवर्सल बेसिक आय की कुछ विशेषताओं का उल्लेख करें। भारत में यूनिवर्सल बेसिक आय के कार्यान्वयन में क्या समस्याएं हैं?
- Basic income is an income unconditionally granted to all on an individual basis, without means test or work requirement.
Characteristics of basic income:-
- It is Universal and not targeted. This would not only be more appropriate, it will also reduce the burden of the bureaucracy in so far as it is engaged in identifying the deserving beneficiaries of any targeted programme.
- Another important feature is cash transfer in lieu of in-kind transfer.
- UBI is unconditional. Cash transfers are not tied to exhibiting certain behaviour, and the people are free to spend the cash as they want.
- It wouldreduce the motivation for work and might encourage people to live off assured cash transfers.
- It issimply unaffordable.
- As it is estimated paying a basic income equivalent to the poverty line, to each and every adult in India, would entail a cost of 11% of GDP, which is way above the 4.2% of GDP that the government currently spends on explicit subsidies.
- It is also argued that unconditional cash transfers mightraise wages due to the decline in the supply of casual labourers.
- There is also question of whether a shift towards it should be a substitute for all existing subsidies or whether it should complement the existing ones.
The value of a UBI for India has to be evaluated in terms of creating the conditions for its own redundancy by enabling the poor in India to step out of the “low-reform, low-income trap”. Besides, the real value of a UBI for the poor in India rests on its ability to solve the economic problems and political incentive challenges