From the Monday, 18th July, 2022, many small items of the kitchen and other households, were brought under the GST regime, which was never thought of, when this regime was actually introduced. Many of the items were taxed are such that, perhaps we never ever use them throughout our life or use them seldomly. But now, if we wish to use them, we have to pay tax.
When this news cracked, one wondered why this GST on these small things and items which if taxed can affect routine life of a citizen who lives very miserably and such a small increase can throw his meager budget off track...!!
On further investigation it was found that Govt has been studying the case of Sri Lanka very closely. Govt seems to have learnt its lessons very well. The crisis is Sri Lank, could have not been this worse, had the Govt worked on such taxes and used them as a tool. The collapse of the Sri Lankan economy, is due to many reasons and foremost being the lower tax rates and exemptions from taxes on many counts.
The financial managers of the Sri Lankan economy, played it very well to bring this dooms day for that country, as its imports continued, borrowings, which were not required in some of the sectors continued, leading to payments being made to foreign countries, major chunk of such payments going to China for the interest payments and import of unnecessary things. Sri Lankan economy's major earnings come from tourists, which received a biggest hit due to covid crisis.
Hence, no income only expenses. No foreign remittances in form of any income, only outflow, for payment of interest and import bills. The loans, taken at higher interest rates, never generated any income and those assets become non performing assets for Sri Lankan economy. Local production of goods was never envisaged and kept on importing everything they required. At the end of the day, Govt had no money. As taxes were not forthcoming and so was the foreign remittances, from the tourist. So how to run the nation? rest is the story we all know.
Sri Lankan citizens are no less culprits. They enjoyed when the Govt brought down or removed the taxes. They did not ask the Govt., from where will the money come for economy to run? How Govt will manage its own administration and its expenses? Everybody loved Rajpakshe family. This family behind the screen, dis everything to sell their own country to China for few dollars kickbacks....!!! They had, then entered into some nefarious agreements with the Chinese Govt., which the people of Sri Lanka were unaware.
Similarly Pakistan, another Indian neighbour, has also mismanaged its economy and had developed a very bad habit of foreign aids being received for using the country's Geo-political and strategic locations. The foreign currencies kept flowing in that country for one reason or the other. That subsequently resulted in habit of getting money by any means, be it was USA for its support in Russia- Afghanistan war, Saudi Arabia for spreading Wahhabism, China for making CPEC, even at a cost of surrendering its own self respect and sovereignty.
The local production of goods and services for local consumption, was also imported and it could afford to pay, till FATF, was not in action and put it in gray list, which had caused tremendous hardship to Pakistani people due to dwindling foreign currency reserve and declining Pakistan currency.
Nepal, also another neighbour, first developed a very cosy relations with China and started to borrow from China. But then with change in the Govt at the helm, prevented a definite economic fall, which awaited Nepal for the worst.
The scene is same. Story is same. Script is same and consequence is same.
China develops a close relations with top political leadership of a country. Bribes them with money or honey trap. Lends them money into some projects, which are not that necessary for its development, at high rate of interest, when that project becomes white elephant, earns nothing and repayment of such loan comes up, these nations finds themselves into the economic trap.
But you will ask, you all knew, what was written above, what was new in that...?
The Govt of India and the GST Council, together have learned their lessons well. They know that these economies are collapsing as they do not have Aatmnirbhar concept. It knows that in the crisis, small businessmen, finding opportunity to earn huge profits, would hoard commodity of routine usage. So Govt covered all small items. Imposed minimum GST of 5% on many of the household consumables. This tax has been put on almost all packed food items and packed households items.
With this anyone trying to earn undue amount of profit, Govt will come to know at what rate is selling the goods. As GST Return requires purchase rate and Sales Rate to be filled. If any undue amount is charged Govt can track that seller and question them.
Remember, the GST is levied on small items, used for daily use, packed items, which can be stored and hence hoarded.
Remember, India and ts economy and security are in safe hands. Indian learnt its lessons during covid in 2020, that it needs aatmanirbhar Bharat. See we are reaping the benefits of such a farsightedness after understanding what is happening in our friendly (?) neighbourhood.
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