Goods and Services Tax Act was passed in March 2017 in the Parliament and came into effect from July 1, 2017. It is a comprehensive, multi-stage, destination-based indirect tax imposed in India on the supply of goods and services. It replaced existing multiple flowing taxes levied by the central and state governments with the vision of simplifying the taxation process and increasing both the tax base and the revenue generated. While GST collections were not very impressive in the first quarter, the average collection of FY 2018-2019 is Rs. 97,040 cr which is a huge jump from the 2017-2018 average of Rs. 89,885 cr.
With India’s second anniversary of the Goods and Services Tax (GST), it is important to remember the wider debates on the successes and failures of the biggest tax reform in the country. It would be reductionist to offer an argument tilted towards one side, in favour or against the reform. The route that GST has taken has been nothing short of fascinating, in terms of the successes and failures that one of the world’s fastest-growing economies has confronted.
Good things first, if we were to shed light on all the positive achievements that GST has brought about in the country, it would be important to talk about the ease of doing business and a broader tax base, two of the most remarkable successes of GST.
One Nation One Tax
Moreover, “One Nation One Tax” calls for “One Law” in a federal structure and despite the vehement criticism the policy has got, it is worth noting that each decision has been taken by consensus and unanimity. It is a more flexible method of taxation and has led to tax buoyancy which is visible in the increase in revenue growth through indirect taxes.
However, there were also some unique problems that emerged with regard to the implementation of GST and criticism has been rampant, especially around the failure of the IT System. Many say that the digital system that GST is based on, is not well-prepared to handle the requirements of the reform.
There have also been many debates around the different tax slabs, ranging from 0% to 28%. Many exporters have also faced a problem regarding the refunds of the input tax credit on exports, and The Federation of Indian Export Organizations estimates that refunds of over Rs. 200 billion are still pending.
While there are some jitters about the GST System almost 2 years from its introduction, it is important to see it as a work in progress. No matter how tough the ride gets, financial experts at Peseko are there to give you expert advice, whenever required to help you sail through seamlessly.
If you are starting your business fresh, then it would be a good idea to read this section next – https://peseko.com/how-to-start-a-business-from-scratch/
Do leave your thoughts and experiences on GST. Share how you have benefited from GST or otherwise.