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Millennium Post

2 years of GST

2 years of GST

As Goods and Services Tax turned two yesterday, the government noted how its introduction has been a game changer for the Indian economy by replacing a complex multi-layered indirect tax regime with a transparent and technology-driven one. Dubbed as the single biggest tax reform, it has four slabs of 5, 12, 18, 28 per cent under which all products fall except petroleum, alcohol and stamp duty on real estate. Further, there is a list of products which have been exempted under GST i.e., 0 per cent GST and this list constitute daily use products. Petroleum and alcohol have been kept out of the GST's ambit until GST stabilises to a point where it can consider these. It has to be noted that this decision was made to provide financial security to states and ensure that there is a minimum guaranteed income under the proposed GST regime. The VAT in the earlier tax regime accounted for a significant chunk of the state revenue from petroleum and alcohol. Even the Centre would benefit from the excise duty income on petroleum products made from crude. 35 GST council meetings have taken place to deal with the successive issues such as rate, amendments necessary, procedural queries et al. The sheer number of meetings conducted by the GST Council hints at the stressful period through which traders, businessmen, and government had to pass in order to streamline GST into our daily lives and make it comfortable for the country. There is no doubt that the revenue bowl has widened after the implementation of GST as in the pre-GST era, different regulations of various tax authorities used to yield a low compliance rate due to complexity but GST has eased compliance with its umbrella approach and that was the point of it after all. A direct impact of this can be seen in the 12-per cent rise in the government's annual revenue collection. But as the government carried forward the idea of a simplified tax regime, the same was not quite evident in practice. With a multitude of rates, further streamlining is required. Complaints regarding filing return in the GST Network have not particularly given GST a popular vote amongst everyone even as India increasingly copes with the new tax regime. Though the government on GST's second anniversary hit its trial guns to test the new return-filing system which is expected to grossly simplify the process allowing the government to curb leakages. The new return-filing mechanism will be a big plus for the people who are usually stuck in the process with the ensuing frustration not auguring well for GST's reputation. Procedural difficulties are always irksome and resolving those will hugely benefit the business environment that will pave way for a rise in the Ease of doing business in India; boosting the confidence of businesses. To this extent, the government has done a commendable job in addressing the industry's concerns and crafting necessary amends in order to make the systems easier. After falling short of budgeted revenue targets for the starting phase—lower revenue collection—that saw a meandering graph reflecting several rate cuts, the recent months have registered a better figure—March, April, and May have each displayed GST revenue over Rs 1 lakh crore. Registration hiccups have also been streamlined with the recent announcement that only Aadhaar is required for registration coming in as a relief for small and medium traders. The tax slabs i.e., the different rates have been a weight for many and appeal to bring those down to lesser slabs has been hovering but only a gradual shift will benefit the economy as sudden changes can incur unforeseeable losses for the government in terms of revenue. The fact that the GST regime is showing fair results in a majority of the states with more than 14 per cent increase in their revenues highlights its compatibility. Loss of existing revenue stream for states was a major hurdle prior to GST's rollout with compensation fund instated by the government to make up for the losses incurred by states. However, as many as 20 states have clocked increase in revenue citing the non-requirement of the compensation fund by the Centre. GST still has a long way to go with as many as 90 amendments done in 35 meetings of the GST Council a testimony of efforts put in to streamline it. Parameters analysed by experts cite a good trajectory for GST while its redressal mechanism has kept public interests on priority so that the new tax regime benefits India's business and industry environment. As GST embarks on the third year, much is expected out of the tax regime that had a long gestation period owing to several apprehensions that were allayed to introduce GST.

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