One Year has passed since the ‘One Nation, One Tax’ regime has been in place. Despite initial apprehensions, its success has to be measured on the yardsticks of ‘common man friendliness’, ‘advantages for trade and industry’, benefits to economy’ and ‘simplified tax structure’
Dr Sarangapani Bommaraju
The Modi Government has accomplished the biggest tax reform after Independence with the successful implementation of the Goods and Services Tax (GST). It was first mooted by the Atal Bihari Vajpayee Government in 2000. The Kelkar Committee, which examined the issue in 2004, observed that a tax reform of nationwide dual GST would be able to achieve “a common market, widen the tax base, improve the revenue productivity of domestic indirect taxes and enhance welfare through efficient resource allocation”. It took nearly 17 years before GST was finally launched on July 1, 2017.The division of powers between the Centre and the States are clearly delineated in the 7th Schedule of the Constitution, which was amended in 2016 to introduce the GST which subsumed a number of central and state taxes. A dual GST structure has been designed empowering the Centre and the States to concurrently levy GST on intrastate trade. In addition, an integrated GST (IGST) is designed to tax supplies in the course of inter-state trade.India now a Common MarketThe Constitution intends through Article 301 to have “a free flow of trade, commerce and intercourse throughout the territory of India”. Since the safeguards provided in the Constitution were not in operation effectively, the Central and the State Governments used flexibilities provided in Article 302 and 304 to levy multiple taxes. The domestic trade barriers in the form of having different tax rates and procedures in different states and complexity of tax structure and administration stood in the way of India emerging as a single common market. The complex multi layered indirect tax structure had fragmented Indian market into 29 regional markets.
Time to move towards a simplified structure — Rashesh Shah, President, FICCI
The introduction of Goods and Services Tax (GST) on July 1, 2017 has been a landmark in the country’s taxation history. The one year of GST shows a remarkable journey of an entire nation to ensure its successful implementation.
Turnaround time for Trucks cut Significantly
The turnaround time for trucks has witnessed a substantial reduction since the introduction of GST a year back. In states like Kerala, West Bengal, Maharashtra, Madhya Pradesh and Bihar, which were once known for notoriously high waiting time spent at their borders, the impact has been much more pronounced, rating agency ICRA said. The study involving approximately 50 transport companies (pan-India) and 15 consumer-oriented companies (across various sectors) was conducted by the ICRA to comprehend the impact of GST on the ground since its introduction on July 1, 2017.
Implement the Recommendations of Advisory Committee— Jitendra Gupta, President, Laghu Udyog Bharati
The Laghu Udyog Bharati has welcomed the GST. But the one year experience of the new tax regime shows that the difference in taxation between the small and big industries should be maintained. We feel the small industries and small traders continue to suffer due to non-implementations of the recommendations of the advisory committee, constituted by government to curb the drawbacks.
Allow a Pan India Registration Number— Praveen Khandelwal, Sect. Gen., Confederation of All India Traders
GST has brought fundamental changes in the taxation system as most of the commercial taxes stands subsumed in GST relieving the traders from the burden of multi-compliance and subject to multi-Authorities. The e-compliance in GST has virtually ended the direct interaction of the traders with officials reducing corruption to a great extent.
One of the important advantages of GST is availability of input credit, which means no one has to pay the tax from his pocket except consumer as GST is destination based taxation system and last consumer in the supply chain is liable to pay tax. This feature makes GST a unqiue tax system. Once GST is established as a stable taxation system in the country, it will be beneficial for both traders and the Government.
However, issues like filing of multi returns, refunds from the Department, awareness and education about GST fundamentals and its compliance obligations are some of the issues which need immediate attention of the Government. It is suggested that instead of monthly returns, quarterly returns should be prescribed and for one more year it should be on Form 3B only. It is also suggested that refund process should be automaticlly credited to the Bank Account of the traders. The HSN Code should be made applicable only on the manufacturers and not on traders.
Instead of taking Registration in each State, one Registration number should be allowed Pan India. Those traders who do not have computers should be provided subsidy by the Government to equip with Computers etc. With mutual cooperation between Government and Traders, GST will emerge as a good taxation system.