Manish Sisodia calls for abolishing IGST, says collection money lying idle

IGST is an interim tax paid by businesses and can be adjusted when they pay CGST or SGST.

 Deputy chief minister of Delhi Manish Sisodia on Wednesday demanded abolishing the Integrated GST, saying Rs 1.81 lakh crore has accumulated in the IGST fund but the money is lying idle and is causing economic loss.

He also favoured bringing real estate within the fold of GST, as it’ll help deal with black money and called for doing away the ‘inspector raj’ associated with the electronic way or e-way bill system.

Sisodia said the Goods and Services Tax (GST) was first conceptualised as ‘one nation, one tax’ but with five tax slabs, it has come out as ‘one nation, several taxes’.

He said he had opposed Integrated GST (IGST) from the beginning and had suggested sticking with only Central GST and State GST.

“I feel IGST is a bad idea. In last GST Council meeting, we got the figure of Rs 1,81,418 crore IGST which we have collected and is lying idle in an escrow account. This is neither in account of state government, nor in central government account. It’s not helping central or state governments or traders as it is just lying idle. It’s a loss to the economy,” Sisodia said at an Assocham event in New Delhi.

Under GST, the tax levied on consumption of goods or rendering of service is split 50:50 between the Centre and the state. Such tax is known as Central-GST or CGST and State-GST or SGST.

On inter-state movement of goods as well as imports, an Integrated-GST or IGST is levied, which accrues to the Centre. A cess is levied on top of these taxes on sin and luxury goods which make up for the compensation kitty used to make good any revenue shortfall faced by states on implementation of GST.

IGST is an interim tax paid by businesses and can be adjusted when they pay CGST or SGST.

“After one year if we can decide to abolish IGST... this is not required. Today or tomorrow we have to do it if we have to make GST effective. IGST is the biggest problem in way of GST,” Sisodia said.

He said the requirement of e-way bill should be done away with for intra-state movement of goods.

“Inspector raj should be done away with. We should do data driven inspection. If everything is online, then you do not need inspectors to ask drivers about goods being transported in the truck.

“E-way bill is not a good idea and it should not be there for intra-state, because intra-state means district to district you are putting inspectors for inspection. When everything is data driven and online, then why the need for physical presence of inspectors? You check data and go to godowns and showrooms,” Sisodia reasoned.

E-way bill system was launched on April 1 for movement of goods between the states. The requirement of e-way bill for intra-state or within the state movement of goods was launched in a phased manner beginning April 15.

Touted as an anti-evasion measure, transporters of goods worth over Rs 50,000 are required to present e-way bill to a GST inspector, if asked. The measure was expected to help boost tax collections by clamping down on trade that was happening on cash basis.

On the issue of fewer tax slabs, Sisodia said there is a problem in the very foundation of GST.

He said GST should have been fixed at a particular rate instead of various slabs of 5, 12, 18 and 28 per cent plus cess.

GST, which had subsumed over a dozen local taxes, was rolled out on July 1, 2017.

The Centre has on various occasions defended the multi-tier GST structure, saying it was required to keep inflation under check.

Union Minister Arun Jaitley too had said there cannot be a single GST rate in a country like India where a large segment of population is still below poverty line (BPL). As an example, he had said that a ‘hawai chappal’ and a BMW car could not be taxed at the same rate.