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.
