Goods and Services Tax (GST) Vs. Bullet Train (Shinkansen)

GDJASUJAPost GST, one major announcement made by the government has been the launch of the Ahmedabad-Mumbai Bullet Train project. The GST and the Bullet Train both have generated immense public interest or public debate. This is so because of the many similarities they share especially in the complexity of their implementation. Both these ambitious projects require massive infrastructure, although of different kind. There is also a very huge amount of public money involved in both of these decisions.

Let’s assume the GST to be a Bullet Train. Then it is very clear that the government has already built this train and also built all the required tracks on which this train has to run. Infosys was awarded a Rs 1,380 crore contract to build GST Network (GSTN) system in Sept. 2015 that involved building and maintaining the technology network crucial for implementing the GST across the country for five years. By and large, the travel path of this train (i.e. starting point and the end point) has also been put in place. All the taxpayers, who qualify to be registered under the GST system, have to be the passengers of this bullet train. It is compulsory for them to catch this bullet train and travel the applicable distance without fail or face penal action for missing any ride.

The GST network became fully functional from July 1, 2017. The entire IT infrastructure is now in use and the GST passengers have already started complaining about the glitches they are facing, in addition to slow speed and their inability to board the train as and when they want as per the statutory regulations. Mostly, these shortcomings are not in any way because of the passengers. The government is aware of the difficulties but calls them ‘teething trouble’, and hopes that the contractors and experts will overcome them soon. Moreover, there are thousands of GST passengers who don’t know how and from where to catch their bullet train. They also don’t know the ‘art of travelling’ with this new vehicle. They have to seek the services of agents or consultants and pay them a hefty fee in order to timely fulfill their obligation of riding the bullet train periodically as mandated by the government. This way, the GST is also going to create thousands of jobs like the ‘Shinkansen’ which the government claims is going to create 20,000 construction jobs, apart from 4,000 direct and 20,000 indirect jobs for operations. Both these government initiatives are, thus, employment oriented.

On the contrary, passengers of the Japanese Bullet Train – that we may get in 2022/23 through the courtesy of our PM’s friendship with Shinzo Abe, Prime Minister of Japan – will be free to use the train or discard it totally due to whatever reason. But whether you ride or not, you will be required to bear the burden of the Bullet Train’s cost and expenses by paying your taxes which are likely to go up steeply in coming years even though a large part (81%) of the cost ($13.8bn out of $17bn) of the project is very cheaply funded (@ 0.1% interest rate) by the government of Japan. But we are too familiar with how the project costs shoot up due to multiple delays that are caused in the implementation of such projects for a variety of reasons.

Since Shinkansen is still 5-6 years away from us at this point of time, we should focus on, and be concerned about, the GST bullet train that has already taken off. The technology for the GST is new and indigenous. The government authorities, the GSTN, and Infosys are all trying to put this train into the trajectory whose parameters are still evolving and are still not tightly specified. In addition to this, they have also to make sure that no qualified passenger misses the train, remains absent or travels inappropriately to prevent any possible revenue shock. Passengers, on the other hand, have their own concerns, difficulties and costs involved.

Let’s hope India will finally overcome all these ‘teething troubles’ and achieve the set goals. I take this opportunity to wish all the GST passengers a very happy ride and good luck. Additional good luck to our textile fraternity.

Managing Editor

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