Criticism of GST Implementation
The implementation of Goods and Services Tax (GST) in India has faced criticism from global financial institutions, industry experts, sections of the Indian media, businesspeople, and opposition political parties.
The major criticisms relate to the complexity of the GST structure, high tax rates, delays in refunds, documentation requirements, technical problems, and compliance burden on small businesses.
World Bank’s Criticism of India’s GST
The World Bank, in its 2018 India Development Update, described India’s GST system as overly complex.
The report highlighted several weaknesses in India’s GST framework compared with tax systems in other countries.
One major concern was the 28% GST rate, which was described as the second-highest tax rate among a sample of 115 countries at that time. According to the provided content, this rate was subsequently revised.
Exam Point: The World Bank’s 2018 India Development Update described India’s GST as overly complex and highlighted the 28% rate as the second-highest among a sample of 115 countries.
Problems Faced by Businesses
Indian businesses also criticised the implementation of GST because of delays in tax refunds and excessive documentation requirements.
The GST system created a significant administrative and compliance burden, particularly during its initial implementation period.
A partner at PwC India stated that when the first GST returns were filed in August 2017, the system crashed because of the heavy volume of return submissions.
This technical problem highlighted the challenges faced by the GST technology infrastructure during the early stages of implementation.
Political Criticism of GST
The Indian National Congress was among the most vocal critics of GST implementation.
Rahul Gandhi criticised the GST regime and accused the BJP-led Government of negatively affecting small businesses and industries.
He referred to GST as “Gabbar Singh Tax”, using the name of a fictional Bollywood dacoit to criticise the tax system.
He also described GST as a system that removed money from the pockets of poorer people and called its implementation a major failure.
Rahul Gandhi supported replacing the multi-slab GST system with a single-slab GST structure. His criticism of GST intensified during various State election campaigns in 2018.
Impact on Small Businesses
According to the estimates mentioned in the provided content, approximately 230,000 small businesses shut down due to complications associated with GST compliance.
The complexity of compliance requirements was considered a significant challenge for smaller businesses with limited administrative and financial resources.
Exam Point: According to the provided estimate, approximately 230,000 small businesses closed because of GST compliance complications.
Higher GST on Affordable Goods
GST has also been criticised for imposing relatively high tax rates on some affordable and commonly used goods.
The taxation of bicycles is given as an example. Bicycles are mainly used by low-income and rural populations, but they attracted a GST rate of 12% according to the provided content.
The tax increased the retail cost of bicycles.
Manufacturers demanded a reduction in GST on regular and electric bicycles from 12% to 5%. The proposed reduction was intended to improve affordability for low-income groups and daily-wage earners.
GST and the Circular Economy
An analysis by the Centre for Science and Environment found that the GST framework encouraged linear consumption rather than supporting a circular economy.
A linear consumption model focuses on the traditional pattern of using resources and products without sufficiently supporting their reuse or circulation.
In contrast, a circular economy aims to promote the continued use and circulation of resources and products.
According to the analysis, the complexity of the GST system created difficulties for informal workers in sectors such as waste picking. These workers may face barriers when attempting to develop businesses that support circular economic activities.
Impact of GST on Sports Equipment Imports
Taxation of Imported Sports Equipment
After GST was implemented on 1 July 2017, India’s shooting community raised concerns about the taxation of imported sports equipment.
Before GST, certain imported sports equipment had been exempt from duties. Under the new GST structure, different tax rates were imposed on imported shooting equipment.
| Imported Sports Equipment | GST Rate |
|---|---|
| Pistols and Revolvers | 28% |
| Rifles, Shotguns and Ammunition | 18% |
| Accessories | 12% |
The new tax rates substantially increased the cost of high-quality imported sports equipment.
Such equipment was mainly imported from major manufacturing countries such as Germany, Italy, and the United Kingdom.
Impact on Aspiring Athletes
The increased cost of imported sports equipment created a major financial burden for aspiring athletes from modest financial backgrounds.
According to the provided content, some families obtained loans to purchase equipment required for training and competition.
The higher cost created concerns that the GST structure could discourage participation in shooting sports and negatively affect India’s international competitiveness.
Campaign Against GST on Sports Equipment
The taxation of imported sports equipment resulted in a broader campaign by members of India’s shooting community.
Jaspal Rana, a multiple-time Asian Games and Commonwealth Games gold medallist, strongly criticised the taxation policy.
He publicly questioned the response of the National Rifle Association of India (NRAI) and the Government regarding the impact of GST on athletes.
Journalist and national-level pistol shooter Farid Ali also raised awareness about the issue through news reports and social media advocacy.
His reports appeared on Aaj Tak and the India Today Group.
These public campaigns encouraged the NRAI to formally approach the Finance Ministry for immediate relief.
Issue Raised in the Lok Sabha
Kalikesh Narayan Singh Deo, Senior Vice-President of the NRAI and a Member of Parliament, raised the issue in the Lok Sabha on 4 August 2017.
He argued in favour of GST exemptions on sports equipment to ensure that athletes could access affordable equipment.
The campaign also received support from Union Sports Minister Rajyavardhan Singh Rathore, who supported the demand for policy changes.
IGST Exemption for Imported Sports Goods
In November 2017, the GST Council granted an exemption from Integrated Goods and Services Tax (IGST) for imported sports goods of a “specific nature” used by renowned and aspiring athletes.
The shooting community welcomed the exemption as a positive measure.
The relief was expected to reduce the financial burden on athletes and support the development of sporting talent.
Exam Point: In November 2017, the GST Council granted IGST exemption for imported sports goods of a specific nature used by renowned and aspiring athletes.
Key Points
- GST implementation faced criticism from financial institutions, businesses, media, and opposition parties.
- The World Bank’s 2018 India Development Update described India’s GST as overly complex.
- The 28% GST rate was the second-highest among a sample of 115 countries at that time.
- Businesses faced refund delays, documentation requirements, and administrative burden.
- The GST return filing system reportedly crashed during the first return filing in August 2017 due to heavy submission volume.
- Rahul Gandhi referred to GST as “Gabbar Singh Tax”.
- He supported a single-slab GST system.
- According to the provided estimate, around 230,000 small businesses shut down due to GST compliance complications.
- Bicycles attracted 12% GST, and manufacturers demanded a reduction to 5%.
- The GST framework was criticised for encouraging linear consumption instead of a circular economy.
- Imported pistols and revolvers attracted 28% GST.
- Rifles, shotguns, and ammunition attracted 18% GST.
- Sports equipment accessories attracted 12% GST.
- Kalikesh Narayan Singh Deo raised the sports equipment GST issue in the Lok Sabha on 4 August 2017.
- The campaign received support from Rajyavardhan Singh Rathore.
- In November 2017, the GST Council granted an IGST exemption for specified imported sports goods used by renowned and aspiring athletes.
Quick Revision Summary
GST has been criticised for its complex structure, high tax rates, refund delays, documentation requirements, and compliance burden on small businesses. The World Bank’s 2018 India Development Update described India’s GST as overly complex. GST was also criticised for its impact on affordable goods and the circular economy. After the introduction of GST, imported shooting equipment attracted rates of 28%, 18%, and 12%, creating financial pressure on athletes. Following a public campaign and parliamentary intervention, the GST Council granted IGST exemption in November 2017 for specified imported sports goods used by renowned and aspiring athletes.