GST is with wrong rules

Among all arms of administration in India, the one dealing with commercial taxes (excise, customs & sales tax) is saddled with corruption of mind boggling proportions. The attitude in the tax administration is that all taxpayers are potential criminals and that subject them to taxation is a matter of identifying and controlling them and catching those who cheat. No modern tax system can function on fear alone. Tax administration requires an environment in which citizens are induced  as a social norm to comply with tax laws or by threat of punishment for non-compliance at minimum cost. Tax administration's task is to prevent pervasive non-compliance. Some taxpayers always comply because they do not have opportunity and are risk-averse. They think it is the right thing to do, and other right-thinking people are also complying.  Efficient services to taxpayers facilitating reporting, filing and paying taxes is a more cost-effective method of securing compliance than countering non-compliance. Since no tax administration is perfect, explicit provision should also be made to deal with mistakes. Tax administration should never be overloaded with impossible tasks and the propensity of governments to alter tax legislation frequently. Both tax officials and taxpayers must know what the tax law is and how it will be applied.The tasks of tax administration consist of identification, assessment, and collection. Due to limited resources tax systems have tended towards ‘self-assessment’ of their tax liability and pay. Inducing citizens to comply with tax laws is difficult with large informal sectors, poor salaries of public servants, ineffective legal systems, and distrust of government. The key to success lies in evolving a strategy, with the available resources, minimize the scope for non-compliance and to maximize the likelihood of detection and punishment of non-compliance. Each country must evolve its own strategy, depending on its own circumstances and background.

Read the detailed analysis  GST: Right intent. Wrong rules

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A fine is a tax for doing something wrong. 
A tax is a fine for doing something right.

The income tax created more criminals than any other 
single act of government ... Barry Goldwater

Collecting more taxes than is absolutely necessary 
is legalized robbery ... Calvin Coolidge

My View:
Theoretically, GST is a very radical reform aimed at improving economy, ease of doing business, etc. But hurried implementation has many pit falls. GST undermines federal freedom of states guaranteed by constitution. Centre will become too strong and the states too weak. USA has not adopted GST not to undermine federal structure, spirit and autonomy of its states. Not good for India with massive population and diversity.

Changing trajectories needs considerable preparation, effort and time. Ignoring any of them is not only detrimental but also catastrophic. The hurriedly rolled out GST with just three months of transition, ignoring the complexities like deficient infrastructure, IT knowledge, creating awareness, training, grievance remedial processes, etc are likely to impact large number MSME exporters with exports share of 45% and could impact exports and economy. GDP likely to come down by few points during first year. While long term benefits are imagination & illusion, short term pain is guaranteed and could even pull down already ailing economy impacted by mindless demonetization, low growth, low inflation, stagnant consumption, high joblessness and distressed agriculture. GST is certain to impact informal sector further, which provides livelihood for 90% of people and already destroyed by demonetization.

A decade ago we were told VAT will resolve all incongruities and corruption that engulfed sales tax but see nothing happened. Tax policy is as good as it is administered, by authorities who are blatantly corrupt.