Policy

GST@4: Government counting more hits than misses

Our Bureau New Delhi | Updated on July 01, 2021

India is entering into its fifth year of GST on Thursday after its introduction on July 1, 2017   -  Getty Images/iStockphoto

Experts call for lot more action, especially on rate rationalisation

Over 400 goods and 80 services saw reduction in Goods & Services Tax (GST) during the first four years of the new indirect levy regime, the Finance Ministry said on Wednesday. With this, weighted GST rate has also fallen below 12 per cent.

India is entering into its fifth year of GST on Thursday after its introduction on July 1, 2017.

 

In a tweet, Prime Minister Narendra Modi said: “GST has been a milestone in the economic landscape of India. It has decreased the number of taxes, compliance burden & overall tax burden on common man while significantly increasing transparency, compliance and overall collection.”

In a series of tweets, the Finance Ministry highlighted achievements during the four years. However, experts call for lot more action, especially on rate rationalisation.

Also read: No GST on examination fee charged by Central/States/NBE, says CBIC

Talking about the achievements, the Ministry highlighted that the total levy (Centre and States) on most of the items were around 31 per cent. Barring around 28 goods, all other items have a GST rate of 18 per cent or below. Giving some examples, it said common-use items such as hair oil, toothpaste, and soap have seen their tax rates come down to 18 per cent from 29.3 per cent.

Appliances such as fridges, washing machines, vacuum cleaners, food grinders and mixers, shavers, hair clippers, water heaters, hair dryers, electric smoothing irons, TVs (up to 32 inches) have all seen tax rates being lowered to 18 per cent from 31.3 per cent. The tax on cinema tickets—— earlier anywhere between 35-110 per cent— has been brought down to 12 per cent (where ticket rate is up to ₹100) and 18 per cent. Most items of daily use are in the zero or 5 per cent slab.

On the compliance issue, a business needs to make just 12 submissions now as against 495 submissions earlier, the Ministry said.

Hits

According to Parag Mehta, Partner at NA Shah Associates, increase in taxpayer base, introduction of e-way bill and e-invoice, increase in collection from year-to-year (ignoring pandemic period), clubbing of various taxes i.e VAT, excise, service tax etc., rationalisation of rates from time to time and hassle-free movement of goods are among key hits .

Mahesh Jaising, Partner at Deloitte India feels one of the key transformations that can be attributed to GST is the deployment of a technology enabled tax ecosystem with most steps in a compliance and review lifecycle being automated. According to Rajat Bose, Partner at Shardul Amarchand Mangaldas & Co., the biggest change due to introduction of GST has been the use of technology for undertaking compliance, generating way bills and issuing of invoices.

Misses

According to Mehta, the miss-list for the future course of action, includes delay in implementing GST returns system, continuous amendments and changes in the Act, contradicting advance ruling judgements, unnecessary blocking of input tax credit, delay in refunds, applicability of GST on inter branch transactions i.e cross allocation of HO expenses, complex return filing process and ambiguity over jurisdictions between State and Centre. “Further, four years have passed, however, petroleum products and alcohol are still outside the ambit of GST. It is high time the same are included under GST,” he said.

Jaising added that the industry is not far behind in adopting technology for GST, it may need to up its game and focus on adopting technology, not only to automate compliances but to effectively manage data and information required to respond to analytics-led enquiries from tax authorities. “The CFOs/CEOs may need to play a larger role in enabling the adoption of technology for compliance and data management, even by their vendor/partner ecosystems, to prevent tax or credit leakage at any step,” he said.

Published on June 30, 2021

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