GST Opportunities, Hits, and Misses
The concept of an uniform GST for India was originally approved in theory in 1999, and it became a reality on July 1, 2017, opening the door for the realisation of the “One Nation, One Tax” vision. Since welcoming its largest overhaul to the indirect tax system, India has had five years. By eliminating several indirect taxes, broadening the tax base, and removing the cascading effect of taxes, it can be claimed that the GST has undoubtedly lowered tax barriers across the nation. By combining their resources and implementing the GST, the federal Government and the states have demonstrated cooperative federalism by removing compartmentalization in indirect taxation and achieving uniformity.
While the GST ecosystem has many positive aspects, the widespread adoption of digitalization for indirect tax compliance deserves special attention. A pan-Indian digital platform has been adopted, which has helped businesses run more efficiently while also requiring less physical labour. The filing procedure can now be controlled and monitored by tax officials as well as business owners. This has made it possible for different regulatory agencies to easily communicate with one another, making it easier to find tax evaders.
Additionally, the analytical tool(s) used under GST have been successful in limiting leakage to a great extent. It is anticipated that revenue leakage will be further reduced with the developments proposed in the 47th GST Council meeting to implement IT reforms to verify the background of registration applicants and use risk-based monitoring. However, if we omitted a discussion of GST’s difficulties and future prospects, our picture would be incomplete.
The number of tax slabs being reduced
There are four significant tax bands for the GST in India: 5%, 12%, 18%, and 28 %. These had been anticipated to be eliminated for a while. Given that the 47th GST Council press briefing revealed that slab rationalisation is already in the works, the government could want to take into account reducing the number of tax slabs in order to make the Indian GST rate structure in line with that of other nations.
Tribunals for GST and advance decisions have a central appeals body.
It is challenging for India to actually attain uniformity across jurisdictions because different State Authorities for Advance Rulings (AAR) have issued contradictory judgements under GST, confusing businesses. As a result, the establishment of a Central Appellate Authority for Advance Ruling has been one of the main demands of the stakeholders in the business. Here, there is also a call to hasten the formation of the GST tribunal. Although the government should think about accelerating it, the 47th GST Council decided to form a Group of Ministers to look at the establishment of the GST Tribunal and issues therewith.
Read More: When is the final day to file an income tax return?
Increasing the network of GST
The recent spike in prices has increased pressure to include electricity, petroleum products, and other exempt industries in the GST. As a result of the full fungibility of taxes, this will have various advantages, including lower costs for industrial consumers.
Concerning anti-profiteering
The courts have ruled that the anti-profiteering provisions, including Section 171 of the CGST Act and Rules 126, 127, and 133 of the CGST Rules, violate Articles 14, 19(1)(g), 265, and 300A of the Indian Constitution. Various businesses contend that the government needs to introduce a sunset clause on the anti-profiteering provisions in order to have market-driven pricing of goods and services, given that the GST has been in place for five years and that the pandemic has significantly changed the cost and business environment for businesses. If anti-profiteering enforcement is needed at all, the government need to think about limiting it to any recent rate reductions implemented under the GST.
Miscellaneous
The government is expected by the industry to streamline audits, investigations, and evaluations as well as avoid notices from central and state authorities from being issued at the same time. A variety of disagreements are anticipated to arise because departmental audits under the GST are only now beginning. It is crucial that the government see to it that uniform procedures are followed across states in order to reduce these to the absolute minimum. Expectations from the government also include, among other things, enabling the cross-utilization of CGST credit across states and the liquidation of accumulated credit.
The goals and expectations of stakeholders were generally met by GST over its half-decade existence. The digitization of compliances, effective coordination between the federal government and the states, and the development of a common understanding of the GST legislation among enterprises and local authorities can be used to describe these five years. In order to achieve revenue neutral collections, the government should concentrate on resolving the few problems and obstacles that still exist. If things keep going as they are, India will soon serve as a global model for how to apply the GST.
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