Dissent, whether by states or traders have always been the unmistakable feature of the GST regime since its rollout in July, 2017. The 43rd GST Council meeting on Friday was no exception and despite being a marathon spanning nearly 9 hours, consensus on core issues like waiver of GST from Covid-related products and extension of the 2022 timeline for guaranteed compensation to states remained elusive. The net outcome has been that there will be a committee of ministers which will re-evaluate the first demand and for the latter, a special session will be convened for a more elaborate discussion. Whatever the decision, strictly from economic point of view, the needs are genuine and deserve unconditional consideration.

 

The prevailing 2nd wave of Covid, just like its predecessor is once again compelling the nation to realise the hard way that it's not just a health catastrophe, rather, a great economic misfortune too that may derail revival dreams. The nation is sick like never before and for millions infected, a major portion of monthly income has to be compulsorily earmarked for saving life from Covid. And for those with comorbidities, meaning an already existing recurring expense for nagging diseases, the current time is critical beyond imagination. Under such circumstances, the states, mostly ruled by the opposition have asked for a zero rate of tax or maximum of 5% on all Covid-mitigating products like vaccines, pulse oximeters, testing kits, ventilators etc. However, they were told that a full waiver exercise is technically difficult to implement and there are no legal provisions under GST law that would allow such populist alterations. So far as legal aspect is concerned, the argument has weight. However, as a number of states have proposed, an ordinance can very well be brought as a viable solution and the Centre must have a serious thought to it. Regading extension of compensation to states which saw no breakthrough, it's necessary to recount that in October, 2020 (42nd GST meeting) the Council announced to extend the timeline beyond the 5-yr transition period for "such period" as may be required to meet the revenue gap. It was thus the expectation of the states for an official seal to arrive this time. But, it appears the Centre will take time and states, whose financial strength will be less sound within the next 2-3 years compared to present level, have to wait. However, it's heartening that Arunachal's plea to keep ENA beyond GST's arm (each and every state wanted it and will be benefited) has been accepted.

 

If laws need tweaking, for lessining economic hardship of the masses, they should be. States' demand for extension of compensation is nothing outlandish. With a little sense of magnanimity, both are possible.