BackOpinion | GST as a work-in-progress
GST revenues have been underwhelming as well, but this should change once the economy picks up
PremiumIndia has now had its goods and services tax (GST) for two years. Its launch on 1 July 2017 had been a grand affair, with a midnight flagoff in Parliament and a big accompanying ad campaign hailing a single tax for a single nation. It was indeed the biggest indirect tax overhaul in the history of Independent India. Few would argue that it has lived up to its pre-launch hype—some enthusiasts had expected a boost of an added 1% to the economy’s growth—but the point to note is that it’s still early days yet.
The very fact of its launch goes to the credit of Narendra Modi government, which had to work hard to institute a tax that would subsume a confusing patchwork of levies that varied from state to state. Yet, the promise of “a good and simple tax" is yet to be fulfilled. This is largely because of numerous GST slabs and the resultant questions of what items needs to be in which. The concept of input tax credit also needs to be better explained, and its rules clarified, even standardized at some point. The GST registration processes are also cumbersome, making compliance both expensive and time-consuming. In addition, the return filing procedures are tedious. All these issues need to be sorted out.
GST revenues have been underwhelming as well, but this should change once the economy picks up. The intake has been on an uptrend, of late, and this could present the government with an opportunity to reduce the slabs to three, or possibly just two. It may be tricky doing this without affecting revenues, but losses on account of rate changes could be offset by the gains of greater compliance and business done easily. To achieve these goals, the tax authorities must ensure that the paperwork is not too onerous for a single-person business operation. An easy-to-use interface could make a big difference to what taxpayers think of GST. Let’s hope its third anniversary is more of a celebratory occasion than this one.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
