GST completes a year- The Impact remains Debatable
The Goods and Services Tax (GST) introduced last year, came into effect on 1st of July, 2017. Implementation of GST is one of the remarkable events in history of India, since it wiped out all the indirect taxes levied by center and state. One common tax across the country- comes as a stepping stone towards development of economy. It lead to No distinction between Goods and services. Both goods and services are treated equally, making invoicing simpler for businesses. Similar treatment is up-front with evolution of services in the economy.
On its completion of 1st year of implementation, its impacts are highly debated. Experts around have differing opinions about how successful was its implementation.
GST Implementation- Promises made
GST introduction would reap the benefits of a single tax structure in the country. The complex tax structure of different taxes from state and central was replaced for a better business environment. Furthermore, it is a by-product to the campaign of digitalization in India. These efforts did provide results as the GDP of the country stood at 7.4% for Q4 FY 2018.
- Starting up is easy: Under the GST regime, businesses have to register themselves only once; instead differently with different states. This reduces their paper-work and compliance to a great level. In addition, registration is online and quick. It saves time and effort for legal obligations. Less of tax liabilities and more of business!!
Easy compliance is the a major point of debate. Various experts suggest that small business, larger chunk of the economy, are yet found struggling with GST registrations and procedure.
Input credit- Issues surrounded
Input credit required the reporting of a transparent flow of goods and services. It would encourage Indian economy to turn into an organized one along-with removal of cascading effect of taxes. This would bring down inflated prices on goods/services, in the long run. In short-run, however, firms might face liquidity crunch.
On one hand, firms fear the disputes over Input tax credit. While, on the other hand, government has set up an Anti-profiteering committee to ensure that the benefits of GST reaches the end consumer. The committee has issued notices to the business houses who seem to have benefited unduly by GST provisions.
What about Consumers?
There has been uncertainty and instability in the GST norms. Tax rates of over 179 items have been reduced than the one stated. This creates chaos and confusion. Businessmen being skeptical about the tax rates do not lower the prices of goods and services. Hence, consumers are yet to be benefited from GST .
On the other end, Consumer awareness about applicable taxes on their purchases has considerably increased; given the buzz of GST.
Procedural complexities and Inconvenience
A complicated return filing system through an unstable GST Network; creates inconvenience. The infrastructure lacks stability. Given the ambiguity in various procedural norms, professionals also struggle to cope up. Recently, the format of return filling is changed, uncertainty about implementation of Reverse Charge Mechanism, implementation of e-way bill,etc. continue to remain points of pain. Each of these decisions have lead to debate of opinions.
Shortfalls – On the end of government
Compliance issues. Government reported April as the 1st ever month where in the Tax collections exceeded 1 lakh crores. But the difference between registered dealers and the ones filling returns, is still a matter of concerns. Part of is due to the fact that registered dealers include the ones that are exempted. But those dealers must file nil returns. Lack of knowledge of compliance remains an obstacle for government.
The GST India also witnessed a nudge when Malaysia scrapped its GST law after 3 years of implementation.
Given the dynamic nature of the economy, not completely, but a transition is taking place amongst the business owners. Businesses are opting for technology to assist themselves with GST compliance. Which suggests that the software industry bears the potential of growth. In the area of business technology, automation of mundane tasks such as taxation and accounting; is the future of business enterprises.
Overall, GST a positive move towards better Business Ecosystem of India, is evolving & taking better shape.
- Posted on Jun 29, 2018
- By Leena Bhagchandani
- 0 Comments