GST roadblocks

Transporting goods from one State to another has become a smoother affair on paper, what with GST replacing a messy basket of central, municipal and State levies. But as a BusinessLine field report (GST on the highway, June 4) on moving a consignment from Sriperumbudur to Bhiwandi points out, extortion mafias still stall vehicles at State borders. The roads have improved, and a journey of about 1,300 km can be completed in just over 42 hours (against about four days in the pre-GST era), but the fact that a truck ‘may be made to pay ₹500 even if the documentation is perfect’ tells us that the old order is still alive and kicking. At a macroeconomic level, this still leads to higher cost and turnaround time, forcing drivers to take a calculated risk of not stopping at these entry points. If they are unlucky, they are pursued, the truck halted, and the extortion fee multiplied manifold. Truckers alter their route, taking a longer one just to avoid notorious checkpoints. India might have jumped 30 places in the ease of doing business ranking, but on the ground the story is less flattering.

For the lower rungs of officialdom to be defanged, rules have to be simplified. To begin with, there are too many GST rates for the same category of goods. Mobile squads are not well informed on these nuances and often end up holding up consignments of tax-free goods, or attribute the wrong rates to them. The fitment exercise remains imperfect because the complex categorisation of commodities and rates under the earlier system has been carried over to the GST regime. If the Council has changed rates and fitments along the way, it is on account of feedback from industry. Apart from simplifying classifications, the rates need to be reduced. There are too many items under the 18 per cent category, providing incentive for evasion. Lowering the rate to 12 per cent will improve compliance. As for the e-way bill, its exemption limit should be raised from ₹50,000 to ₹2 lakh. This will improve ease of business for small industries. State level VAT staff at checkposts need to be trained and updated on the new system. They should abide by circulars issued by the top tax bureaucracy and should not be allowed to hold up consignments unless justified. The role of state transport departments needs to be rationalised and rent seeking rules eliminated.

The cost of moving goods can be reduced if toll rates are rationalised. Smart toll booths will eliminate both delays and opportunities for corruption. Trucks should pay lower rates than private vehicles, as is the norm in many countries. Smaller toll plazas can be wound up, as the Maharashtra government has wisely done by paying a termination fee to the private operator. A short-term revenue maximisation approach, whether with respect to GST or toll rates, will prove counterproductive for the economy. Finally, the government should operate on an assumption of trust rather than suspicion.

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