The goods and service tax regime complete three years since it was first introduced on July 1, 2017. The biggest tax reform for indirect taxes in India has created a single market emulating international best practices, but hiccups for taxpayers remains.
However, there are some key issues with the tax-
1. Covid-19 mix has slowed GST revamp 2. Multiple and complex tax structure 3. Restructuring of tax rates difficult given the decline in revenue 4. Compliance and filing issues not yet sorted 5. Litigation and few appellate tribunals to dispose of cases 6. The divergent decision by the advance ruling authority 7. Issues with transitional credit and input tax credit
Reforms needed-
1. Simpler tax structure with fewer rates a. Have a simple three rate structure b. Correct inverted duty structure c. No new cesses should be allowed d. Consolidate circulars and notifications, orders in the law 2. Simple tax filing and assessment a. Simple filing regime yet to start forms b. GSTR-2, 3 not operationalized c. Have faceless and online GST assessment 3. Input tax credit and refunds a. GST refunds need to be speeded, electronic online processing b. The input tax credit system should be improved c. Allow offset of input credit of one state against payment for another state d. Provide a refund of accumulated input credit
Other issues that need to be addressed-
1. GST compensation to state - revenue not enough to pay 2. Greater processing capacity for GSTN portal 3. Clarity on the e-invoicing implementation date 4. Anti-profiteering related provisions need to be more clear 5. Clear it roadmap / definitive timelines for new return systems 6. Measure to avoid tax evasion.
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