GST Completes One Year – 5 Successes, 4 Failures & The Future Of Taxation In India!

Although GST has been a major success, a lot is still to be desired

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GST completes one year
GST completes one year (Image Source: Hindustan Times/ PTI)

Goods and Services Tax, hailed as the biggest tax reform of Independent India, has completed one year. GST regime came into force on July 1st, 2017, and it promised a new era of taxation in India.

How has it performed in the last one year?

Hereby, we will present 5 hits of GST, which promises a new beginning; 5 misses of GST, which shouldn’t have been missed.

And a brief overview of the future of taxation in India.

5 Major Hits Of GST: The Positive Aspect

 

Black Money Trail

The biggest hit of GST, as per Govt. sources and numbers is the success in recovering black money, and black money hoarders.

Govt. has implemented Big Data along with high level of business intelligence to scoop out black money trail in India, and this has resulted in recovering thousands of crores of taxable money, which was hidden before.

One of the tax officials said, “So far, we were able to identify anomalies of thousands of crores of tax leakage, and the government is on it,”

One Nation One Tax

Now, a person from Punjab pays the same tax on an item, which a person from Tamil Nadu pays. Hence entire nation is now more United, because of one-nation, one-tax principle introduced via GST. Now, as the taxation is same, businesses can manage their production, supply chain, storage in a more optimized manner.

Checkposts on highways are now free, as trucks are able to file GST via online portal, and there is no need for long delays and queues. The entire market of India has now become one single entity, creating a seamless business environment.

Inflation Under Control

The biggest fear which critics of GST had openly exhibited was related with inflation: They had argued that GST will unleash a new level of inflation, as seen in those countries where GST was introduced. In the past one year, nothing of sorts happened, and inflation is very much under control in India.

The anti-profiteering authority established by GST Council and different slabs for different consumer goods were the factors, which controlled inflation.

Note here, that the recent increase in price of fuel has nothing to do with GST, as petrol and diesel are not yet covered under GST.

Tax Base Increased

As per a recent survey, it was found that there has been an increase in 50% of indirect taxpayers, post-GST implementation. Direct tax payers numbers have also increased, as together along with demonetisation, GST pushed and encouraged more businesses and traders to register themselves for paying tax.

Considering that only 4% of Indians paid tax in 2016, this was one a major achievement of GST.

As per Dr A B Pandey, Chairman, GSTN, “A total of 1,12,15,693 taxpayers stand registered with the GST system today in which 63,76,967 are the ones who have migrated from previous tax regimes and 48,38,726 are the ones who have entered the new tax regime in the first year of GST indicating towards a significant increase in active taxpayer base,”

Multiple Taxes Consolidated

As much as 17 different taxes, which includes Central taxes such as excise duty, services tax, countervailing duty and state taxes: value added tax, Oct roi and purchase tax were rolled into one, thereby consolidating taxation.

It became easier for the taxpayer to file their returns, as instead of paying different taxes at different location, one single tax structure was created.

As a result of these major successes, monthly Rs 90,000 crore was collected as tax under GST in the first year.

However, there were some major failures as well.

4 Major Misses Of GST: The Negative Aspect

The Filing Process Is Flawed

GSTN, the IT backbone of GST filing via portal was expected to handle 300 crore invoices per month.

But unfortunately, the IT infrastructure crumbled, posing severe inconvenience to the taxpayers.

Trader Bodies like CAIT claimed that GST is a mental torture, even as blame game was played between Infosys, the IT company which implemented GSTN and Tax Officials.

Even World Bank has claimed that GST is one of the most complicated tax structure, and GST Council will have to make it simply in future.

Claiming Input Tax Credit Is A Hassle

The monthly three-stage refund process for claiming Input Tax Credits has proven to be a major challenge, especially for the exporters. Their input tax credit is delayed, causing them to slow down their businesses.

Besides, several businesses have claimed that there is a big mismatch between GSTR-2A and GSTR-3B filing, due to which considerable amount of input tax credits have been withheld.

Refund Of IGST Is A Lengthy Process

Several businesses have claimed that the refund of Integrated GST has been a major issue, especially Textile industry, which is staring at a loss of Rs 1500 crore due to this delay.

Although the Central Board of Excise And Customs have asked the States to process the refunds under IGST faster, some experts are of the view that IGST refund issue has slowed down the growth of some sectors, including manufacturing.

New Cesses Put More Pressure

Several new cess and surcharges have been introduced, especially in the luxury goods segment. A new 290% sin tax on tobacco and soft drinks have been proposed, which can prove to be a big burden on those, who are involved in this niche.

Automobile and sugar too will soon face additional cess under GST, and this has been hailed as a major failure.

The Future Of Taxation in India

As of now, only a year has passed under GST, and a lot of new developments, and reforms are expected in the coming days.

Revision of tax slabs is one of the most crucial elements under reforms, which can be announced very soon. Simplifying the return process, and introduction of Big Data and AI to decode the GST data is another aspect which we are expecting in the coming days.

2019 General Elections are next year, and it would be interesting to observe how the general public responds to GST, via their votes.

What is your opinion on GST regime? Do let us know by commenting right here!

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