Working Out GST in India- Changes until 2021

India witnessed a structural change in the Tax Reforms after the introduction of GST (Goods and Service Tax). It led to replacing multiple taxes and cesses at the Center and State level, combining them into one single tax.

It was welcomed by many trades and industry people as it leads to the removal of obstructions and paperwork. On the other hand, the end-consumers enjoyed the relief with the reduction of overall tax incidence.

The manufacturing sector enjoyed a big boost with the GST. For the transport sector, the SINGLE E-Way bill was introduced which was the only bill to be furnished by the transporter. The movement of goods was now possible with the abolition of tolls, tax barriers, and checkpoints leading to roadblocks.

 

There were a few reasons for people to accept the GST but there were numerous points for the people to oppose and contradict the Govt policy. In such a scenario, it was essential to work out the GST POLICY. A roadmap was to be made for people to follow the GST compliant path. 

Media played a great role in imbibing the concept of GST. News channels and broadcasting helped in breaking the ice of the new barrier of GST. Further, the government proactively helped people to adapt to the new taxation policy and assuring them that GST is surely a step for the growth of the economy. The flexibility and compliance from the GST further helped the common people. 

Technology and Digital transformation of billing processes by installing the GST billing software facilitated the complex billing process with compliance. Decoding the complexities of GST Structure and working out the best solution for the same is a challenging task still needing much priority.

 

Opposition of GST

Gst faced opposition from a major sector of the Indian population. They were not ready to adapt to the new tax reform and as such GST faced some major challenges in its initial gestation phase. Gradually, with flexibility from the GST council and education of GST benefits people settled down with GST. As they became familiar with the concept and its easy application, it was accepted by MSMEs, corporate giants, and proprietors too.

 

GST REVENUE for State and CENTRE

 

India is a vast country with 31 states onboard and a fairly large section of people illiterate, it was difficult to make the concept of GST clear for everyone. Further, the state and center should both be provided with the GST revenue. A fair mechanism must be implemented wherein a

stabilized revenue is directed at both levels. States gradually adapted the GST regime with the introduction of a 14% incremental growth rate of GST revenue, but the center was not given any such assurance.

 

Fixes in INPUT TAX CREDIT

Going by the figures, a study shows that of the total tax liability of Rs 6 lakh crore declared by registered dealers of India, only 1.5lakh crore is paid in cash. The rest 4.5 lakh crore is settled by the input tax credit. Surely the govt needs to fix the leakage in the wrong availing of the input tax credit for the country to avail the boost in the GST revenue. It is assumed that even if 10% leakage will be fixed in the entire system, the monthly GST revenue will shoot up to 2- 2.10 lakh crores which is a decent figure.

 

Inclusion of the excluded item in GST 

The list of excluded items from GST is filled in by Electricity, petroleum products, real estate, and alcohol. Such exclusions certainly create distortions of cascading tax and further reversal of input tax credit. The need of the hour is to bring about a proper tax restructuring wherein petroleum products can in included in the GST, but as it gives a big revenue to the center and state, it seems a difficult decision to implement.

 

Moreover, if the GST includes Petrol, Diesel, and alcohol under itself, it will bring about uniformity as the rate at which they will be available across borders will be the same, irrespective of the state prices as of now.

 

Rationalizing the SLAB structure

 

There must be a transition from the four slab tax structure to the three slabs and then towards the two slab structure. The more the slabs, the more are classification disputes, duty inversions, blockage of funds, and refunds. A concrete structure will further bring about compliance.

 

To conclude, GST faced opposition in its teething phase but now has been able to introduce itself as an essential tax reform that is beneficial for the end consumers. The efficient tax system demands issuing GST Compliant bills at the basic level with complete information and details on the bill.

Such GST-compliant bills can be issued proficiently with CATSBILL. Catsbill is a Lifetime free GST billing software that can help the small, large, and proprietors to become self-independent and issue GST compliant bills, manage inventories and payments.