Must Read: “GST” Implementation in India Turns One, paving way for Unified Market Structure towards Unifying India - The Fearless Indian
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Must Read: “GST” Implementation in India Turns One, paving way for Unified Market Structure towards Unifying India

  • Sukanya Iyer
  • July 1, 2018
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As I start my thought Process of writing on GST, A year back when it was implemented in India on 1st July 2017, I Penned my viewpoints in my earlier blog on GSTs Historic Implementation in India, now Child is turning with facing all sorts of Positives & Negatives by Naysayers of our Nation, Friends Happy to Pen my thought Process again withyou all after a brief Break from you all.

Before I pour my thoughts with you all, I would like to quote Swami Vivekananda’s famous words –

“Take up one Idea. Make that one Idea your Life. Think of it, Dream of it. Live on that every part of your Idea. Let the Brain, Muscles, nerves, every part of your body be full of that idea alone.

This is the way to Success.

With the above quote I would like to say that our PM Modi Implemented a Historic Policy of GST, to make it as Single Tax Structure, A Unified Market structure& As we all know that India’s biggest Indirect Tax Reform in the form of Goods & Services Tax (GST) has completed a Year. A comprehensive dual GST was introduced in Indiafrom 1st July 2017. The idea of moving towards GST was first mooted by then Finance Minister in his Budget for 2006-2007. But GST took its shape with the introduction of the Constitution Bill (122nd Amendment),2014. Then the Bill was Passed by the Parliament on 8th August, 2016. This was followed by Procedural ratifications by more than 15 States. Finally, on 12th April 2017, the Central Government enacted four GST Bills.

Central GST (CGST) Bill

Integrated GST (IGST) Bill

Union Territory (UTGST) Bill

The GST (Compensation to States) Bill

In Few Months of its Implementation, all the States approved their State (SGST) laws. Union Territories with Legislatures, i.e., Delhi & Puducherry have adopted the SGST Act & the other 5 Union Territories without legislatures have adopted the UTGST Act. The GST Council, A recommendatory body consisting of representatives of Central as well as State Governments, has met on several occasions & taken very pertinent decisions relating to Tax structure, exemptions, rules, composition scheme, etc. Over the Period, the council has recommended a reduction in the Tax rates of various goods & Services. It is also considering the various issues faced by Trade &Industry & endeavouring it to simplify the new Tax regime & ease compliance issues. On the Compliance Front all registered persons have to file monthly returns in from GSTR- 3B (containing a summary of outward & Inward Supplies) by the 20th of the Succeeding month till June 2018.Additionally, an Invoice Return of outward supplies will have to be submitted in form GSTR-1. The due dates for filing form GSTR-1, as follows.

For Tax Payers, with an annual aggregate turnover up to INR 1.5Cr:

 

Period:            Dates

Jan-March        30th Apr.’18

2018

April-Jun           31st July 2018

2018

 

For Taxpayers with an annual aggregate turnover of More than INR 1.5cr:

 

Period                  Dates

Feb 2018             10th April 2018

March 201810th May 2018

April 2018             31st May 2018

 

The Government has clearly deferred the requirement of filing GSTR-2 (Containing details of Inward Supplies), & GSTR-3(A Consolidated Statement of Inward & Outward supplies) till such time the nominated committee reviews & comes out with a simplified mechanism for the Invoice-matching Process. We also find that under GST, there is a Provision for the person in charge of a conveyance to carry electronic way (e-Way Bill). Let’s suppose if the consignment value exceeds INR 50,000.  E-Way bill can be generated through various modes such as web(Online), Android App, SMS, using bulk upload tool & API based site-to-site integration of all modes. The e-Way Bill system has become effective from 1st April 2018, for inter-statement of Goods. For Intra-state movement of Goods, e-way Bill will be introduced in a Phased manner before 30th June 2018.

The New GST return forms would be Introduced from Jan1,2019, after successful beta testing of the software, Finance Secretary, says Hasmukh Adhia. He also further stated the fact that Input Tax Credit claims are a Potential area of evasion in the GST, regime, & one to One, invoice matching is the key to check Tax evasion. On Scope for rationalisation in the highest Tax bracket of 28%. Adhia, at an Event, he also further opined by saying that reducing number of items in the Tax slabwould depend on revenue position of the Government. The GST Council had in its last Meeting on 4th May approved the design of new return forms. It was decided that the current system of filing summary returns (GSTR-3B), & Final sales return (GSTR-1), would continue for six months. Hasmukh Adhia also said that “while GST collection is about Rs.94,000Cr., to Rs.1Lcr., the total Tax Liability discharged by businesses every month is Rs. Rs.5lkCr. But Rs.4LkCr., of this Liabilities being discharged by way of Input Tax credit claims. Now you can understand what a scope for improving our Revenue if we streamline & if we have a check on Input Tax Credit”. He also further stated the fact that only place where there could be Tax Evasion is claiming Wrong ITC, & that’s an area which can be corrected by using Technology.

Let me give you all Now 1 year of GST, Benefits leading to Formalization of Economy—

One year since the GST was rolled out on July 1, the most visible was seen at the nascent stages was a business slowdown, due to the Transitory effect.  But elsewhere, the benefits have started reflecting in small measures across sectors, which analysts say, should be cues for Investors to capture the big growth Economy will have in reality in coming months to be witnessed for. Pankaj Pandey, Head Research, ICICI Direct.com, told ET Markets.com that “Management commentaries across the consumption as well as Industrial sectors, have been Bullish, indicating that the business Environment has changed for Positive Since GST rollout.”  The most Positive impact of GST, BSE Sensex has gained 15% since GST Rollout till June 26th this Year. Consumer Durable sector, benefitted from formalization of Businesses, which advanced to 26%. We also find that Corporate Earnings, too, were testimony to the Success of GST Implementation.  We also saw another benefit that Net Profit of the Sensex Pack, excluding the banks which grew by 15% year on year. The most Positive Impacted Companies were, Consumer-Oriented companies which witnessed the Robust Volume growth over the past few Months. The BSE Consumer Discretionary Index is up more than 11% since July 1 2017. The reason for the growth consumer Industry is by way of lowering Product Prices in Adherence to the Anti-Profiteering Norms towards Consumers. Next three Months will be crucial where in the real impact of GST would be felt Post successful implementation of inter-state as well as Intra-State e-way Bill. As we all know that India is to remain the fastest growing Economies of the world, this year, & is well Poised to attain the Projected GDP to tough $5trillion mark by 2025, as the Economic Reform adopted in last few Years have started to bear Fruit. Yes, GST will play a crucial role in achieving this Landmark.

The Entire Consumption Basket, Logistics (Surface Transportation), building materials, &Plastic Pipes Segments would be other key Beneficiaries of GST in the medium to Long term. Now there are challenges, Friends, we have to accept the fact that MSME space owing to challenges with the systems & Processes of GST Tax Filing & Additional Cost of Compliance.Moreover, what we find is that GST requires Businesses to Pay their Tax Liability in full & then claim Refund, the reason to elongate the working of Capital Cycle. But in most cases, there are Transitional issues, for the businesses to adopt for a newer change. But I am very sure & Optimistic that due to Formalization of the Economy through GST will bear its fruit in the Long Run.

What GST is Expected to bring/ give it to Economy?

GST is expected to be a desinatation based Tax that should replace the current central Taxes & Duties Such as Excise Duty, Service Tax, Counter Vailing Duty, special Additional Duty of Customs, Central charges & Cesses & Local State Taxes I.e., Value added Tax (VAT), CST, Octroi, Entry Tax, Purchase Tax, Purchase Tax, Luxury Tax, Taxes on Lottery, betting & Gambling, state cesses & Surcharges & Entertainment Tax. It will b a dual levy with State/ Union Territory GST & Central GST. Moreover, Inter-State Supplies would attract an Integrated GST, which would also be the sum total of CGST & SGST/UTGST. Petroleum Products, i.e., Petroleum Crude, high Speed Diesel, Motor spirit, Aviation Turbine Fuel, Natural Gas will b brought under the ambit of GST from such date as may be notified by the Government on recommendation of the Council.

Positive Impact on Economy

  1. The tax Base has increased to about 1cr.assessees & this, in turn, has also increased the Tax Revenue too. The Collection has risen up to Rs.10Lkcr.
  2. Total focus on online IT registration of Tax Payer to Processing of Refund.
  3. Government is playing a very Proactive role in Tax rates & Simplifications on the demand from the Industry.
  4. E-Way Bill has been Facilitated for faster movement of goods due to removal of check posts on State Boundaries.
  5. GST has kept a Total check on corruption.
  6. Government has been quick to roll out & issue clarifications & address the concerns of the Trade by way of Press Release, notifications, circulars have been issued by Government in one year of GST.
  7. GST is levied on final Destination of Consumption based on VAT Principle & Not at Various Points.
  8. GST has clearly mapped out the Provisions applicable to the e-commerce sector which had been a major litigation issue in the Service Tax regime
  9. Due to GST, Warehouse operators & e-commerce aggregators players have shown interest in setting up their warehouses at Strategic Locations, such as Nagpur (which is zero-mile city of India).
  10. With the advent of GST, the invoices now include only an (Harmonised System Nomenclature) a Unique code to distinguish sale of Different goods.

 

While I conclude My thought Process on GST, by compiling Information from Various Journals, I would like to state the fact that any New Policy Implementation Especially Taxation System in Largest Democracy in the world, with such a huge Population with so many different cultural factors & Political Outfits affecting it, would need at least 3 to 5years to settle down. GST was the Tax Reform we had always strived for & no doubt there will be teething issues to attend to. In fact, World Bank report” The GST system is among the most complex in the world with one of the highest Tax rates. Government also plans to develop some simple mobile App for suppliers, who are engaged in B2C, supplies exclusively & help small traders to settle down in the new Taxation regime.  Also, according to Niti Aayog spokesperson, Petrol & Diesel can’t be brought under GST as the total Taxes on them are whopping 90%, which should be all the more reason to include them in GST as soon as possible so that the common man gets the ultimate benefit of reduced Taxes, provided the States budge to a little reduced Revenue in the Initial years.

 

Our PM Modi who is the Formidable Leader of the masses, & a Crusader of Corruption, is working on a Mission mode to curb the Termite called “Corruption”, of all forms from our Nation, though its not easy, but its not impossible though.His Honest Intent & Convictions clear makes his Pro-Vikas Agendas implemented for betterment of common man, to reach & impact 1.25bn Indians towards their growth. GST & Demonetization are two such Bold & Structural Reforms to curb Black Money & move towards a Unified Structure, where it will lead to curbing down Tax Terrorism, Corruption & Evasion implemented Post -independent India to Empower Common Man. Friends, with my Limited Knowledge, & Research, I have expressed my Inputs, hopefully it will throw light on all aspects of GST, & you all can supplement your views for more Information.

 

Jai Hind

 

Dr.Sukanya Iyer

 

 

 

 

 

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