India had taken a giant leap towards a new order in its taxation history on 1 July, 2017. The first year was full of doubts and dilemmas. Complexity was further added by numerous notifications and circulars, which cannot always be tracked by the masses. All the steps so far taken by the government in making the goods and services tax (GST) simpler are welcome. But there is still a long way to go and the GST law is yet to be made simpler.
As on date, traders, tax payers and tax practitioners are facing problems with the complexity of GST.
If this law is made simpler and user-friendly, it is going to be the reform of the decade and will boost our economy.
The new GST registration threshold limit is a farce. If one has to supply goods or services of even one rupee to any central or state government, then GST registration is mandatory. This makes the exemption limit pointless.
GST implies additional operational costs for small businesses. In a developing country like ours, not all small and medium enterprises (SMEs) will be able to afford the cost of computers and accountants required to comply with GST.
It is too difficult to assign maximum retail price (MRP) to handmade products such as local shoes and Banarasi saris.
Most small artisans are illiterate and, therefore, are unable to write MRP on their products and/or do any paperwork. Small businesses with low turnover and outside GST face trust issues.
Buyers demand invoices from even those sellers who are exempted from GST.
Without proof of certificate of GST exemption, small shop owners find themselves stranded and immobile.
A simplified composition scheme has been provided up to a turnover of ₹1.5 crore. However, it discriminates against supplier of services other than restaurants as it has not been made applicable to them. The Indian economy is majorly driven by SMEs. It will be unfair to expect small-scale business firms to make the transition to an online IT platform and expect no errors in return filing. It is an uphill task for the majority of our working population, which has little hands-on experience with IT solutions. The cost of its deployment is also a major concern for MSMEs (micro, small and medium enterprises). The government is looking to shore up revenues to the tune of ₹1 trillion per month. It would be interesting to see if stern measures are taken against tax evaders and firms involved in profiteering.
The present form of GST appears to deliver little on promises. It seems the reform was rolled out with very little homework both at operational and technical ends.
The GST Council needs to take note that a policy must be designed to reduce the compliance burden on the taxpayers. Compliance strategies must include compulsory education and assistance programmes and risk-based audit programmes. It must also run a communications campaign that enlightens businesses, consumers and important intermediaries of the various effects, as well as the benefits of GST.
Sanjay Kaul is chairman of banking and taxation committee, Indian Industries Association