Page 51 - GSTL_11th June 2020_Vol 37_Part 2

2020 ] NEWS DESK J59
or consumption, and this is where the GST Council’s role assumes significance,
given that GST is a consumption tax.
The challenge for the Council, which obviously is flooded with requests
from industry for a fiscal stimulus similar to the one in 2008, lies in ensuring that
it resists the temptation of addressing all problems in one go. Instead, policy-
makers must look for an institutional response that cuts across the competing
claims of stakeholders and helps in reviving economic activity and consumption
across a diverse industrial segment. This requires intelligent categorisation of the
business units that differentiates between the sectors on the basis of their priori-
ties to frame impactful solutions. The reason is that a one-size-fits-all cut in rates
across the board - as in 2008 - will not be optimal, let alone aligned to the fiscal
constraints.
The recent World Trade Organization Information Note on the impact of
COVID on trade in services is a formal acknowledgement of the need for specific
measures, especially for the sectors that rely on physical presence for supply,
such as tourism, transportation, and offline-entertainment. A revival package,
therefore, appears necessary for such affected industries. Policy-makers may re-
call the sales tax-era incentive schemes where the supplier was permitted to col-
lect and retain the applicable tax for a defined time frame, which assisted capaci-
ty-building measures, loan-repayment obligations and funded other business
priorities. These schemes have been highly successful; targeted clusters such as
the Noida and Greater Noida industrial area in Uttar Pradesh being the quintes-
sential example. On similar lines, the GST Council can recommend a revival
package with graded incentives ranging from a complete GST waiver, say, for
two to five years for the severely impacted industries and an instalment - linked
or deferment plan for the other identified industries. In the former, let us call it
the waiver-package, the supplier would be permitted to collect and retain GST
for a specified period similar to a sales-tax deferral scheme. In the latter, which
we call deferment-package, let the discharge of GST liability, which is currently
monthly, be staggered to quarterly or biannual, whereby the supplier would be
able to deploy the GST collection to meet short-term working capital require-
ments.
The response has to vary depending on the sector. To highlight, the sil-
ver lining of the lockdown is the reinvention of online supply models. It is heart-
ening that at least some sectors will grow profitable as these business models set
in. However, instead of being short-sighted and seeking to offset the revenue
foregone, a long-term view is necessary, and thus the need for institutional sup-
port. Retail, health, education, and audio-visual services, which can further ex-
pand online should be facilitated. Most crucially, the telecommunication indus-
try, the successful functioning of which underlines the very idea of a strong digi-
tal economy, must be hand-held to promote recent advances in technology as
they constitute the backbone for the growth sectors, besides the larger economy.
The recent developments on Adjusted Gross Revenue (AGR) have merely ex-
posed the sector’s vulnerability. There is a crying need for a new telecommunica-
tion policy - the latest one of 2012 being clearly obsolete - which addresses not
just the telecommunication service providers, but also the industries that depend
on them, and the consumers, who are increasingly choosing to transact online,
besides the impact of the Apex Court judgment on the AGR issue.
Following demonetisation, the Government incentivised online pay-
ments. Now it is time to shift to the next gear by incentivising online consump-
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