The Indian economy needs a functional GST on priority basis

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GST – Heralding a new era in indirect taxation

The Goods and Services Taxes or GST has been hailed as an iconic tax reform in the history of independent India. It automates and simplifies the process of indirect taxation and has replaced the multi-layered, complicated tax structure prevalent earlier. Labeled as a ‘gamechanger’, GST was conceptualized with the viewpoint of bringing competitiveness and agility in the taxation landscape. By introducing a uniform tax structure across the entire market space, GST was supposed to simplify and streamline indirect taxation. The objectives envisioned were manifold; widen the tax base, enhance compliance and increase revenue, boost exports and drive GDP growth, amongothers.

All is not well…

However, since the nationwide roll-out of GST on1st July, 2017, the scenario that is unfolding is dramatically at variance from the promisedoutcomes. A cloud of uncertainty and ambiguity looms large over the business horizon; from small firms to big corporate houses, India Inc. is bracing itself up for a transition that is unprecedented in scale, scope and nature. Tax professionals are also experiencing anxiety and a lack of clarity.

Problems galore

Since the implementation of GST, a lot of issues have cropped up. Some of these include:

The GST portal is the only channel to carry out the compliance procedure; small traders and businessmen are finding it difficult as it increases the compliance cost and it is not easy to quickly embrace new technology.

To keep the business floating, every businessman has to registered in order to claim input tax credit. This has not gone down well with the small businesses, who will now have to face fiscal burden of compliance.

GST is made for self-assessment for the small businesses. The process of monthly tax return filing has increased the workload and the lack of knowledge and training of the technology was brought a lag of return filing; consequently,extending the due dates of filing.

The liability of SGST, CGST and IGST has created restrictions in terms of availing credit for cross output GST.

Exporters are suffering heavily as their working capital is locked up in refunds. However, after the recent Meet of GST Council, exporters are expecting a positive amendment in the refund process.

The GSTN portal is not user-friendly and intuitive. Also, it is creating issues by accepting wrong details.

Some amendments made to invoice rules post-GST launch have created challenges for assesses. Seamless integration of the new changes in the ERP system has added to the technology cost.

Need for corrective measures

The transition to GST has certainly not been smooth sailing for the business community at large and the small businessman in particular. Procedural wrangles, technical hiccups, payments withheld or delayed and systems getting stalled due to overload are some of the key issues that are affecting tax payers. Lack of clarity on the tax front has stymied the economy and the corporate sector has lost some traction; GDP growth has indeed been impacted the term.

GST registered assesses certainly deserve a better deal. Though GST is a revivalist reform that will have far-reaching consequences, transitional and operational issues have turned out to be counterproductive.

The government must initiate corrective steps earnestly to ensure smooth, efficient running of the GST system. Ambitious plans to revitalize the economy would be futile unless the several operational challenges on the ground are effectively addressed.