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Spoiler Alert: State Levies & Actions may Crash GST Party


Items outside GST’s purview can offset gains of this momentous reform
Auto companies cut prices after the rollout of the goods and services tax (GST) on July 1, but Maharashtra raised the onetime registration levy for new private vehicles by two percentage points. Meanwhile, cinema theatres across Tamil Nadu stopped screenings for four days to protest against a 30% local tax levied over and above 28% GST. The strike States could ramp up these taxes while GST settles Municipalities could impose entry taxes to take cities out of single market was called off on Friday.
Elsewhere across India, transport department officials have emerged as enforcers of a new inspector raj on the roads after sales tax checkposts disappeared, undermining the beneficial, common-market effects of GST by imposing new barriers and levying penalties in the name of rules they have ignored for years.
More such levies and actions by state authorities could spoil the State borders disappear but other inspectors could emerge.
This would undermine support for the GST GST party, especially on the same goods or services that attract GST. Across the world, local levies continue after GST imposed but generally not on same transactions.
GST may have subsumed as many as17 central and state taxes and 23 cesses but there are enough items outside its purview still that can serve to offset the gains of this momentous reform.
Economic Times, New Delhi, 10th July 2017

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