365 days of the GST: A historic journey
The Goods and Services Tax (GST), which was publicised as ‘one nation, one tax’ by the government, aims to provide a simplified, single tax regime in line with the tax framework applicable in several major economies across the Globe. The implementation of the GST got overwhelming support from Industry. The industry took this as an opportunity to redefine supply-chain model, customise IT processes, and evaluate internal and external arrangements to safeguard interest and minimise their tax costs.
As the GST journey progressed, there was a growing realisation of its far-reaching impact. Industry faced various challenges, ranging from new and unique concepts, complex documentation, the high rates of certain goods and services to complex or unclear treatment of several common transactions. The matching concept for claiming credits, provision for availing credits for past period payments, clarity on aspects relating to Anti-Profiteering etc. are some of the some of the emerging challenges that India Inc. be mindful of.
The government has been able to provide resolution to some of the challenges initially faced by India Inc. However, some issues, as illustrated below, are still significant areas of concern:
Rationalisation of GST rates
Currently, more than 5 GST slab rates are notified by the government. More rate of tax make the system inherently more complicated. Thus, government should club certain slabs and make the system user-friendly.
Expansion of tax base
To bring products such as petroleum products, alcohol and immoveable property under the GST net.
Simplification of compliance
The government machinery is already working on the new format and IT-related changes which may become effective in the next six to nine months. The India Inc. need to quickly adapt to necessary IT customisations to comply with new requirements without any disruption in their business operations.
Minimise tax disputes
The government should focus on strengthening the advance ruling process to avoid unnecessary litigation under this new and improved tax regime.
Legislative changes
Some of the genuine business expenses such as employee related expenses, construction activities are still excluded from the periphery of input tax credit claims which is contrary to the very objective of implementation of GST.
Tax Administration
The government should explore consolidation of GST portal with customs portal as an immediate option and as we go along, the direct and indirect tax boards should be consolidated to widen the tax base.
Implementation of the GST is truly a remarkable achievement for the nation. Despite some teething issues, the benefits for all stakeholders are evident. It is now time for the government to stabilise the system and remove uncertainty to make the GST a real success.
Pratik Jain, Partner and Leader, Indirect Tax, PwC India
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