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Adv. Govind Patwardhan


India is a union of states and union territories with federal structure. Power to levy taxes by Central Government and states are separately mentioned and cannot be encroached by each other. When the Constitution was drafted the way commercial transactions took place was simple. There was understandably clear distinction between the subjects of taxation. i.e. manufacture, entry, sale etc. Service was not thought of as a subject of taxation. However over a long period of time the way business transactions take place has undergone tremendous change. The aspect theory to attract levy of tax proved disastrous for the commerce. Most economic transactions have many facets. Aspect theory means if any of it’s aspect is related to subject of tax then tax is attracted. It has resulted into multiple taxes on same transaction.

Each Government department milked this theory to maximize their tax revenue. Multiple taxation during supply chain without right to claim input tax credit made most goods and services costly. This is a single most important reason why businessmen are eager to welcome GST. We have witnessed and enjoyed fusion of music, food, cultures etc. The Government has proclaimed that GST is integration of all indirect taxes into one tax — it is fusion of taxes. One nation One tax is how the Government is advertising this change. Very noble idea II

Let us examine whether the claim is correct. Claim : There will be very few tax rates.

Reality : Before it is implemented the idea has been given a toss. We have 7 different tax rates 0%, .25%, 3%, 5%, 12%, 18%, 28%. If we consider the compensation cess the number will shoot up further. Rates of taxes for services are separate with conditions about input tax credit will end up in factual different rates for such services. With pressure from different sectors number of tax rates may go further up.

Claim : Full seamless Input tax credits will be allowed :

Reality : There are too many terms and conditions for availing tax credits. The list of blocked credit is very long. No input tax credit for exempt supplies mean that the value of exempt supplies are inclusive of taxes. Various formulas are prescribed which are targeted to reduce the input tax credits. For a common man it is difficult to understand those formulas. In addition rate schedule for many services have a provision that it is without input tax credit or with restricted input tax credits. Tax on advance received is another impediment to seamless credit. Refund of accumulated credit will not be allowed. Cenvat credit which was available on pan India basis is now fragmented into 30 states and union territories. Thus It can be said that the this claim is hollow.

Claim : System will be simple :

Reality : In addition to complexity of understanding what is goods and service and different tax rates and input credit provisions the entire system is made further complicated. It has borrowed various concepts from existing laws and put them together. It has borrowed reverse Charge from service tax. Tax collection at source is taken from VAT. Tax deduction at source is from works contract. Job work concept is from central excise. Related party transaction is a concept from customs. Most of these have no significant relevance with VAT system of taxation. It has made the system most complex. Reverse charge tax on inputs from unregistered person has put the last nail. It will increase the unnecessary clerical work without any substantial revenue gain for Government.

Claim : Will implement GST with full preparedness

Reality : The success of GST depends upon robust IT system and infrastructure. Nobody knows whether the system developed by government is properly working or not. Those who tested are not at all satisfied with the system. Assuming that the GSTN system is good, it ought to be complimented by accounting systems which are used by taxpayers. At present there is not a single accounting software which can claim to be GST compliant. Does Government expect that eighty lakh tax payers will learn it in last fifteen days so that they can smoothly migrate to GST.

Instead of writing the law with reference to the new subject of taxation i.e. supply, those who drafted the GST Act have cut-pasted few each of the existing law and put them together. Even schedules of goods and services are borrowed from present laws without much change. It has made the GST Act hard to decipher and difficult to implement.

The journey began with fusion, it turn out to be fission and at present there is complete confusion.

My only regret is a revolutionary noble idea is being killed by petty minded attitude of law makers. I pray God : let the wisdom of political leadership prevail upon grid.

Invoice Format Under GST

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  1. Vineet Goyal says:

    I think if GST had been introduced in phased manner, it would have been better. Like the Govt did in case of Companies Act.

    A simple GST will always remain a dream in India.

  2. Gangaram says:

    Dear sir,G.S.T. is a good tax collection from the businesd men and in service sector also, but it is very difficult to idetify items or group of items to codify in to the grip of percentage .This will be not so easy for the small tax payers . They are impracticable use of rate under G.S.T. because of public in general have no knowlege for calculating of tax . To understood the whole mis mringen is a hesvy task . All the business men are not so highly technically qualify to apply the rate and to arrive st on money .
    In my opinion G.S.T.first of all to demo in market through government authority or Agency. Then the credit will receive from the public In so many stage or places seen demo still a short period.

  3. Amit Sharma says:

    To Guys who replied in favor, Let me tell you one thing may be there are some confusion, but it does not means that there would be no amends. Slowly and gradually it will come in place as the practical begins. When Service Tax was introduced in 1994, the same happened at that time also. Most of the things are still create confusion which are now cleared in GST.
    This is the right time for the professionals, to show their abilities. Now the entrepreneurs will respect you. Instead of saying that they also know accounting, they will ask what to do. how to manage the system. They will now give weightage to your thoughts.
    ” Go hard and put hard”

  4. Vaibhaw says:

    I think one of the biggest issue is GST on advance for sale. In many industory payment is received at HO level but supply is made from factory/ depo from different state to buyer to manage logistics. Now how to handle this situation how to build system for raising invoice to cater all these is a big mess

  5. Amit Sharma says:

    Totally Disagree with you.

    Claim 1. Always there is an exception to the rule. sometimes we can’t put all the commodities under four prescribe rates of 5%, 12%, 18% & 20%.
    0.25% is only for rough diamonds and 3% is for gold. If we analysis state wise VAT calculation for we will find that we are paying somewhere 2.5% average tax beside custom duty. for example, state of Kerala has 5% on gold now it will be 3%. what you say about it?

    Claim 2.
    Most of the thing regarding ITC is already the same as in Service tax. Lets take your example of tax on advance. For a while consider there is no tax on advance. The reality would be that most of business runs on advance against customer rather than to generate invoices.

    Claim 3
    If we go through under the proper guidance of professionals we will find that the nothing is complex. The question is when it comes to work, everything is complex, how a person learn within short period,etc. but the same person when comes to play video game, within couple of minutes he learn it very quickly. The question is that we never ever give importance to paper work nor we want to give fees to consultants. that is why most of the CA’s still engaged in doing bookkeeping or jobs. We all know that ‘lalaji would not give your full consultancy’.

    I think we have to face the situation sincerely and smartly.


    a perfect comment! before making GST laws it was advertised differently like friend of supplier and consumer there by keeping equvilibrium in demand and supply but this commentary has proved reverse. not even a single accounting software giants so far advertised in any media that their products are GST complimented although the implementation is damn sure within a month! in the absence of accounting softwares not within reach,how to file GST1 GST2 GST3 within 10 days of next tax period ie aug17?

  7. anilkumar garlapati says:

    i really agree with the author. Many,Many confusions. If Some body failed to pay his tax dues how far we are responsible.

  8. Jacob Joseph says:

    It is evident from the replies above that most of the people are perturbed except Mr. Suman. I also follow the majority. What the government is doing is without understanding ground reality. See the trouble we face when DSC is validated in GST site. One of the trainer in Kerala was not in the knowledge that the IGST rate would be the sum of CGST & SGST. The trainers are confused about the transitional provisions. When I search books for GST applicable to hotels for their room rent received I did not get any lead . Even I searched google.Now I am confused whether there are separate provisions for GST for services. I am also heard that the traders has to take registration under excise for getting credit for CGST. What are the formalities for that? Rules are formulated about a month back. The rates are finalised about weeks back. Some of the rates are going to be decided only on 11th of this month. The Finance Minister is showing hurry to implement it on 01.07.2017. Without educating people it is going to be a mess. Let people study and do not implement it is haste.

  9. ROHIT SOMANI says:

    yes it is true. lots of confusion and the law is being unnecessarily made complex. for small time trader or small business or small service provider it will be very difficult. instead the complianbce should be made simple for small businesses may be quarterly return with monthly payment of taxes.

  10. Rajnikant Raja says:

    Dear Sir,
    absolutely some facts are very true, but at the same time I would like to say that we are also responsible for the same, as we wait for the new law to come in to force and than starting criticizing it. all the associations like chamber of commerce, assocham, ficci and many local trade and industry association are there but nobody even ask the government to collect the views of the tax payers prior to passing the bill/law the assembly. each and every association should strongly raise their voice to collect/get the views from them and make possible changes accordingly for simplicity of the law/act.

  11. S.C.SUMAN says:

    Very Very Negative approach towards a which is considered to be a game changer and revolutionary Act. Hope you prove wrong and people do not face as many number of problems in implementation of GST as preceived by the authour.

  12. Purushothaman R says:

    Absolutely TRUE. Every word and every sentence describes the character or should I say the DNA of the much touted GST — one nation one tax!!! What a “cheat” this Govt. is??? The bureaucrats are NO LESS who has done this CUT and PASTE work so diligently which their clan has practiced for seven decades.

  13. K. Pundari Kakham says:

    Well said at present status of GST is very confusion which leads to Accounts person tension.

    Requires time for implementation

  14. krishna kumar says:

    well said sir
    the commercial tax officials and excise officials also learned what the traders learned now about GST. the rules and act when VAT comes all the names in KGST is changed to VAT . now VAT will be replaced by GST. ultimately the sufferes are Trading community. God alone should save us

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June 2024