The year 2017 will forever be etched in Indian history as the year that saw the implementation of the biggest and most important economic reform since Independence - the Goods and Services Tax (GST). The reform that took more than a decade of intense debate was finally implemented with effect from 1 July 2017, subsuming almost all indirect taxes at the Central and State levels.
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. This single tax has helped streamline various indirect taxes and brought in more efficiencies in business. GST law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
The implementation of the GST got overwhelming support from the 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, high tax rates of certain goods and services to complex or unclear treatment of several common transactions. The matching concept for claiming credits, adverse and contrary advance rulings, ambiguity on aspects relating to Anti-Profiteering, GST refunds etc. are some of the emerging challenges that the businesses should be mindful of.
However, it should also be appreciated that the authorities have been quick to address public concerns by issuing a series of notifications, clarifications, press releases and FAQs, to resolve a wide range of issues.
There is hope that GST 2.0, which is at the works currently, will be a much improved version compared to the first one. The government has come out with new return filing process. There have been multiple reduction in tax rate for various goods. With the objective to curb tax evasion, the government has also introduced the E-way bill system across India, to track movement of goods.
Partner and Leader, Indirect Tax, PwC India
Tel: +91 124 3306507