Since the roll out of GST on 1/07/2017, the entire journey of approximately 4 years hasn’t been a smooth sailing ship but rather full of mighty storms and commanding blows. The journey full of everyday amendments, date extensions for months, sometimes even an entire year, lack of clarity on topics, shaky infrastructure and an ineffective website, all add to a GST Registered person’s and professional’s misery.
Since the initial promise of One Nation, One tax and an effective Indirect Taxation system which eliminates cascading effect of taxes, GST has come a long way from actually being one. Ever changing rules and rates including the online returns system contribute to the problems.
The initial benefits that were promised:-
- Reduction in Cascading effect of taxes: This seems shady as denying inputs or restricting inputs on purchases and demanding excessive documents is again leading to double taxation. With the entire burden of payment of output liability without setting off the input lies with the supplier.
- Reduction in Costs: – Another promise which is far from reality as the rates of GST in Indian is one of the highest in the world i.e. 28%. Moreover even some necessities are in higher brackets of 12% and 18% like frozen fruits, fruit juices, cheese, ghee, butter etc. which all add to a common man’s troubles. Even Internet and telephones are charged at 18% rate of tax.
- Simplified Tax Regime: – With one of the most complex filing systems and ineffective online facility with majority of people unable to file the returns towards the last dates, this again seems to be untrue. On every last dates, trends for date extension and portal not working are a common thing.
- Benefits to Small Taxpayers: – Small taxpayers are in reality one of the worst sufferers as they burden of compliance cost is huge for them. Return filing system isn’t as easy as it seems and needs an appointment of a Qualified Tax Professional.
- Curbing Black Money: – This also has hardly worked as kaccha bill or bill without real purchase is one of the biggest disadvantages of GST. Lack of tracking of the same with poor implementation of steps regarding the same have hardly solved the issue of Black Money.
- Promotion of Exports: – Though exports are charged a zero Rate of Tax and accordingly Refunds are issued for the same still there are issues regarding the issuing of Refunds on time and mostly Refunds are delayed which has even lead to a slowdown in the Economy.
Most of the benefits promised seem to have failed but the Negatives still exist:-
- Increased costs due to software purchase: The initial cost of purchase of the software’s for filing under GST is quite high as people have to either upgrade their existing software’s or buy an entirely new one.
- Not being GST-compliant can attract penalties: The huge penalties that have to be borne in case of any non-compliances are another drawback. Recently there was a notification which relieved the taxpayers regarding Charging of interest on Gross Amount in GST.
- GST will mean an increase in operational costs: – The operational costs for business has also increased with increase in Working Capital and Compliance costs.
- GST came into effect in the middle of the financial year: – The implementation in the middle of the year was quite troubling for the businesses and was quite difficult to adjust to.
- Adapting to a complete online taxation system:- In a country like India shifting to an entirely online system wasn’t going to be easy and shifting from pen paper invoicing to filing returns online and making payments online has come with its own problems.
- SMEs will have a higher tax burden:- Smaller businesses, especially in the manufacturing sector have faced difficulties under GST. Earlier, only businesses whose turnover exceeded Rs 1.5 crore had to pay excise duty. But now any business whose turnover exceeds Rs 40 lakh also will have to pay GST.
The reason for writing this Article is not to criticise but the highlight the issue of improvement. Even after few years of its implementation, a lot still needs to be done for implementation of GST correctly. Though steps are being taken every day to improve GST but still a lot more is actually required.