Editorial 1 : A Taxing Issue
Context: Authorities must address apprehensions and concerns about the spate of GST notices
Introduction
- In recent weeks, the central and state GST authorities have issued demand notices to companies spanning a range of sectors — from consumer durables to smart phones, insurance, online gaming and service providers.
- As reported in this paper, LIC has received one notice for Rs 290.5 crore in September. HDFC life insurance has received a notice for non-payment of GST to the tune of Rs 942 crore. FMCG major Dabur has received a notice of tax shortfall amounting to Rs 320 crore.
Goods and Services Tax
- GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017.
- In other words, Goods and Service Tax (GST) is levied on the supply of goods and services. Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. GST is a single domestic indirect tax law for the entire country.
Objectives of GST
- To achieve the ideology of ‘One Nation, One Tax’.
- To subsume a majority of the indirect taxes in India.
- To eliminate the cascading effect of taxes.
- To curb tax evasion.
- To promote competitive pricing and increase consumption.
- To increase the taxpayer base.
Shift to the GST: a period marked by considerable uncertainty
- The notices seem to largely pertain to the initial period after the shift to the GST regime — a time marked by considerable uncertainty and teething problems — and gathered momentum towards the end of the limitation period on September 30.
- Their scope was expanded to include “underpayment” of tax, “incorrect availment of input tax credit” and “reconciliation differences” between returns filed and financials.
- The concerns raised revolve around the multiplicity of notices, the absence of a uniform process and lack of coordination between the Centre and state tax authorities. In one particular case, state tax authorities have sought information about GST payments from a firm “based on media reports” of its merger with a company in a different state.
Issues with the GST system
- Since its inception, the GST system has been marked by constant tweaking and significant leakages. The tax administration has over the years worked to address the gaps in the system.
- Between April 2020 and September 2023, more than 6,000 cases of fake input tax credit have been detected. These involved tax evasion of more than Rs 57,000 crore. In the ongoing financial year, so far, 1,040 such cases involving Rs 14,000 crore have been identified.
Conclusion
Context: City municipal corporation’s multiple omissions on the pollution front have high public costs.
Introduction
- For the second year running, the withdrawal of the southwest monsoon in Mumbai has been accompanied by a spike in the pollution burden on the city’s residents. Last winter, the city registered poor or very poor on the Air Quality Index (AQI) on most days from November to January.
Air Quality Index
- AQI is a number, which is a measure of air quality. The higher the AQI, the worse the air. The colour-coded AQI index was launched in India in 2014, and it helps the public and the government understand the condition of the air and what subsequent measures are to be taken to combat the situation, based on its severity.
- There are six categories of AQI, namely ‘Good’ (0-50), ‘Satisfactory’ (50-100), ‘Moderately polluted’ (100-200), ‘Poor’ (200-300), ‘Very Poor’ (300-400), and ‘Severe’ (400-500).
- According to the Central Pollution Control Board, part of the Ministry of Environment, Forests and Climate Change, the AQI transforms complex air quality data of various pollutants into a single number (index value), nomenclature and colour. The pollutants measured include PM 10, PM 2.5, Nitrogen Dioxide, Ozone, Carbon, etc.
Case of Mumbai
- People in the country’s financial capital have been choking on bad air for much of this month. Adverse meteorological conditions, triggered by climate change, seem to have negated the natural cleansing advantages of the city by the sea.
- But as a series of reports in this newspaper has shown, a large part of the blame should be taken by the city’s municipality, the Brihanmumbai Municipal Corporation (BMC). The agency’s Pollution Mitigation Plan, released in March, identifies five sources of pollution — construction debris, road dust, open burning of solid waste, use of unclean fuel in eateries and industrial emissions.
BMC’s response to the report
- But the municipality’s response to its own report has been belated and patchy at best. Its Standard Operating Procedure, released on October 21, does detail measures to curb dust pollution but the agency has yet to find ways to tackle Mumbai’s longstanding waste management problem.
- The BMC’s waste segregation system is restricted to residential buildings and gated societies. It leaves out the city’s slum clusters where most people burn waste, mainly comprising plastic, rubber, polythene and paper. The incineration releases fine particles in the air, making it toxic.
- BMC rules prohibit garbage burning but the municipality’s enforcement mechanism leaves much to be desired. The municipality has not made adequate investments in creating awareness about responsible waste management.
BMC’s budget and its management
- The BMC has a budget of Rs 52,600 crore, more than that of several states in the country. But there is a wealth of evidence on this rich municipality’s failures to use funds judiciously.
- In March, a CAG report flagged “major systemic problems, poor planning, and careless use of funds” by the BMC. It pulled up the agency for “lack of transparency and probity in the execution of works taken up at a significant cost”. The municipality’s multiple omissions on the pollution front have public health costs.
Conclusion
- The alarm bells have, in fact, been ringing for at least seven years now. Since 2016, Mumbai has been reporting an increasing number of fatalities due to respiratory diseases, including COPD and lung cancer. The exposure of school children to poor air is another pressing concern. The BMC needs to get its act together, to make people’s well-being its priority.