What is the issue?
With GST regime nearing its first full quarter since its roll-out, an assessment of the effects highlights the need for a course correction.
What are the outcomes?
- Revenue - Revenue collections from the first month appear optimistic with just 70% of eligible taxpayers bringing in a substantial amount of direct taxes.
- Thus, as far as the exchequer is concerned, the GST appears to have begun well with many more taxpayers still registering.
- The resultant healthy revenue would give the government the necessary fiscal room to rationalise multiple GST rates into fewer slabs and possibly lower levies as a stimulus.
- Business - However, for businesses the GST regime has brought many challenges.
- Firms of all sizes across sectors are struggling to file their first set of returns under the GST due to various roadblocks in the GST Network.
- These include issues related to invoice matching, claiming of transition credits via the Tran1 form, errors in making final submissions, uploading of returns and of invoices, among others.
- Extension of deadline - The government has extended the deadline for GST returns for the first month twice.
- Despite the benefits, this is a problem for the taxpayers expecting a refund from the authorities on taxes already paid.
- This is bound to affect their working capital availability, create a burden on their finances and impact their production.
- This is particularly impacting the exporters who are facing delays in return due to procedural problems.
- Besides, the GST Council has already changed the announced tax rates on over 100 products and services within about 75 days of the roll-out.
- An ever-changing policy landscape is hardly conducive for attracting further investment to boost the economy.
What is the way forward?
- A lot of things were not anticipated or tested such as the GSTN when the government opted for a July 1 launch for GST.
- The extension given by the GST Council will help GSTN to ramp up its system and businesses to understand the issue.
- It is essential now that the group act expeditiously and transparently with regard to the GSTN’s operational capacity.
- The procedural problems need to be resolved for the industrial units to be comfortable to switch-over to the reformed tax regime.
Source: The Hindu
