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CA Gaurav Gupta

ca-gaurav-guptaAfter the enactment of Constitutional (101st Amendment ) Act, 2016, the hope for advent of Goods and Service Tax (“GST”) in India is no distant dream.  GST Council has also been notified on September 15, 2016 and thus, the policy formulators have taken their positions as part of this Think-tank and shall be responsible for taking the biggest fiscal decisions of the Country.   The initial decisions would include formulation of Model GST law, rates as shall be applicable to different goods / services, determination of exemption to goods and / or services, Rules and processes etc.

Having said the same, this main body requires a lot of homework by each of its constituents.  Since the body has become a single place for determining almost everything in relation to taxing supply of goods and services in the Country, each of its constituent would now have to understand the impact of every decision of the GST Council on its own subjects, impact on its treasury from such decisions, its relationships with its fellow states and also the movement of business into and out of its states.  All these decision would change the way Governments have till now visualised their indirect policy and the way they shall be doing the same in the new era.  Also, the focus of demands of the industry might also shift from state specific requests to request to GST Council.   At this stage it is pertinent to mention that while the focus of each state should be meet its local interest, however, for the success of GST in India, the aim should be national interest.

Thus, to achieve the above objective, every stakeholder, including government of all states, Central Government and Union territories with legislature would be required to formulate certain bodies and undertake certain works, some of which are proposed in this article:

Restructuring their administration cadre:  GST enactment would not be a big change only for tax payer but also the tax administration.  The way taxes were imposed and collected would see a drastic shift and thus, the restructuring of tax administration at all levels is inevitable.  The jurisdictions and subjects shall change, thus requiring the entire administration cadre to be restructured.  The change becomes more difficult when we speak about a country like India having varied demographic and cultural profiles.

Forming their own internal think tanks:  Though every government would be part of the larger think tank – the GST Council, to support their representation in the GST Council they would require a team of experts and administrators who can present their requirement to the representative and also are capable of assessing the impact of policy decisions proposed or taken in such GST Council.  The experts would come from different walks of trade including representatives of trade bodies/ associations, Accounting professionals, representatives of consumer bodies, economists, Information technology experts etc.

Reworking their tax administration system:  Increasing tax base is always the focus of every government as it denotes both prosperity amongst citizens and more revenue for government.  The manner of increasing tax base would altogether change in the new regime and the government would be required to learn new manner of administering their subjects – through electronic systems.  The new regime would be dependent on roboust IT systems and also a team of techno-administrators who could analyse the huge data as shall be supplied by the taxpayers through electronic interface of GST Network (GSTN).  The IT infrastructure, interface with tax payers and analysis interface with departmental officers shall determine the fate of ease with which collections would be maximised in a proper manner by the respective governments.

Training for the new era:  Even though the entire infrastructure and interface be placed, desired results cannot be achieved unless the entire team of officers who shall administer the tax payer in the coming times are trained in a proper and systematic manner so that when the data of the tax payers is put before them, the same can be

Approachable approach: Apart from a lenient view, the addressal of the problems of the taxpayer be handled through a matured system of online and call centres wherein a taxpayer without being asked to disclose his identification can share his problem and can get an answer and sooner we may find a compliant tax base with lesser tax shortfalls.  The model need to be replicated in physical mode in form of helpdesks at the government offices to address problems of small tax payers as well who are not much acquainted with technology.

Government should also ensure that GST provisions are made available in form of small booklets and mobile app in regional languages. Even important decisions impacting common tax payers should also be communicated in regional language to ensure effective communication with all stakeholders.

A soft approach:  The initial phase of the implementation shall have teething problem for both tax payer and administration.  While the focus on part of government shall be to properly capture its tax base as well as their transactions, the trouble is no less for taxpayer as he also shall be facing a lot issues in terms of understanding the new law, upgrading his IT infrastructure to meet the requisites of compliance, training his team etc.  These changes may result in errors and omissions on part of the subjects.  Though intentional evasions can never be ruled out but it is also to be believed that most of the taxpayers are not evaders and thus, an initial moratorium be allowed to all atleast for six months where when pointed out, and when tax and interest is paid by the tax payer, penalty proceedings should not be initiated against them.

Check on rise in commodity pricing: A basic fear which has grasped the minds of the citizens before the advent of GST is the rise in prices of basic commodities.  Thus, it becomes imperative on part of both Central and State governments to ensure check on commodity prices, particularly food items and medicines and if need be to take counter measures like maintaining stock and ensuring their availability through mass distribution mechanism.

To conclude:

Though each stakeholder might have hundreds of idea to make this proposed legislature better, however, the need of the hour is to provide ideas to make it a success.  Though each of the stakeholders is important, however, being the biggest stakeholder, government need to play the most important part to support all its subjects during this most challenging transformation of Indian Indirect taxation.

Check Negative List of GST here

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May 2024