The Goods & Services Tax (GST) is no ordinary tax. It is conceived to be the lifeline of India's tax collection machinery - to plug loopholes, digitise and formalise one sector after another. Once exempted industries such as liquor, real estate and fuel are included, GST would account for nearly all of India's indirect tax collection and more than half of India's entire tax revenue. Failure of GST, clearly, is not an option.
But ever since it was unveiled on July 1, 2017, the long-awaited GST has been, to borrow from Winston Churchill, "a riddle wrapped up in an enigma". It was supposed to ramp up the Centre's revenue so comfortably that the then Finance Minister Arun Jaitley didn't hesitate in promising a 14 per cent annual hike to states for five years. But it couldn't. Instead, the Centre is struggling to pay states' share. It was supposed to simplify tax filing. But despite course correction, users continue to complain it is far too complicated. And system blackout is common on deadlines.
It was supposed to plug tax leakage; it couldn't. GST collections have been short of the Rs 1-lakh crore mark in 20 of the 28 months since it was introduced. Fiscal 19/20 is likely to end with a gaping hole of between Rs 1 and 1.5 lakh crore in collections.
GST appears shaky because of large-scale evasion. Businesses are using novel ways to circumvent India's most promising indirect tax - from innovative ones treading a thin line between right and wrong to the other extreme of outright fraud. In the run-up to Budget 2020, the Centre has no option but to crack down on GST evasion, even at the expense of criticism of another round of tax terrorism. Read how GST is being circumvented on Gaming GST .
Meanwhile, stock markets continue to defy gravity, with the Sensex crossing the 41,000 mark and going strong. If you are still wondering what's driving the markets this time round, the answer lies in Rashmi Pratap's account of how foreign portfolio investors (FPIs) have overshadowed domestic financial institutions by a wide margin this year. Enjoy as long as it lasts. After all, without doubt, FPIs remain the most opportunistic investors and have set their sights on India after a year.
Three years since he was ousted by the Tata Group as its executive chairman, Cyrus Mistry has secured a minor victory with NCLAT, Mumbai, delivering a shock judgement calling his removal "illegal" and restoring him as the group chairman, while asking successor N. Chandrasekaran to step down. The latter part of the judgement is being deferred for four weeks to allow Tata Group to appeal against it. The Appellate Tribunal, in fact, overturned NCLT's judgement of July 2018, which had rejected Mistry's petition. NCLAT struck yet another blow to the Tatas by cancelling the move to convert Tata Sons into a private company, something that was opposed by Mistry. We look at how the Tata-Mistry battle may unfold next.
May I wish you all a very Happy New Year, 2020!