Technical Issues in Adapting GST

After 17 years of awaiting the replacing many indirect tax laws[1] making “One Nation One Tax” into reality. GST bill as The Constitution (One Hundred and First) Amendment Bill, 2017 has been passed by NDA government in the year 2016, August and after ratification by states and president assent, it came into force on 1st July 2017.

The idea of GST model was first conceived by the then BJP government as a reform of one tax rate under of leader of Atal Bihari Vajpayee, and he formed a 3 member committee headed by Asim Dasgupta to design the model of GST. The object of the bill was to introduce a uniform and transparent indirect tax regime in the country that will bring ease in doing new startups, widen the tax base and increase tax revenues, improve compliance, remove multiple tax structures, ease filing of tax returns by businesses, reduce inflation and increase overall GDP.

The GST Portal[2] has been introduced is a website where all the returns and registration related processes under GST is carried out. After GST Login, the registration, uploading of returns, uploading of invoices and payment of taxes, and other things are required to be done on the GST Portal.NSDL has been appointed to incubate the GST Portal and develop its functionality. NSDL has created a pilot portal known as “GST Pilot Portal”

Here, every tax payer will be issued a 15 digit common identification number which will be called as “Goods & Service Tax Identification Number” (GSTIN) a PAN based number.Online application form for dealers will be available to provide their details and upload documents. Registration includes basic steps like register themselves on the Enrolment page, and then Login using the given “User ID” and “password”, filling the application form by uploading the requisite documents related to excise, Service Tax, IEC, CIN, Professional Tax number, Shops & Establishment Number and any other state specific registration numbers, contact numbers, postal address & E-mail address of business entity, bank account details including MICR code, place of business, details of goods & services, scanned signed photographs.

GST stands for Goods and Service Tax, it is a uniform indirect tax across the country on the products and services, where the tax will be laid on the value added at the each stage of production (at each stage of change in ownership) with a slab ranging from 0%, 5%, 12%, 18% and 28%. And recently 3% slab has been added specifically for gold.

GST has been divided into three kinds,

  • Central Goods and Service Tax, (CGST)
  • State Goods and Service Tax, (SGST); Union Territories GST,
  • Inter- state Goods and Service Tax,(IGST)

As the names says it, CGST,SGST and UGST is levied by the central government , state government and UT government respectively on supplies within the state and IGST would be levied on interstate supplies and imports and collected by the Central government.

Apart from all this, it has its own challenges in implementations, Such as

  • It is a completely online process beginning from the registration to the payment of tax and for a traditional method of pen-paper followers of India would find it difficult to understand.
  • And also,it a difficult task for the small and medium enterprise to adapt it as they wouldn’t have equipped with such technical support.
  • The whole GST is a complex concept to understand and it wouldn’t be easy for everyone to understand and adhere to it.
  • Even though the aim was to simplify the whole tax structure but because of multiple tax slabs it would be difficult in actual implementation.
  • The job of corporate sector is going to, be doubled up as instead of 13 returns filling now they have to file 37 returns (3 returns per month and one annual return) and that is just for the office located in a single state, if they have multiple branches across the country, then multiple return need to be filed.
  • The accounting business software need to be changed in the whole of the country enterprises who have VAT and Service tax incorporated in them.
  • Apart from these there are technological issues, bugs temporary blackouts in the GST portal regarding logging in.
  • Major challenge would be to the companies who have to completely revamp their tax and IT infrastructure which would be a burden on them.

And so on so forth challenges are there.

This major tax reform, is not easy to digest sooner by everyone in the country, the challenges need to be overcome and need to be reduce the complexes then the actual object of the bill would be deemed to achieve.

[1] Service tax, excise duty, countervailing duty (CVD), special additional duty (SAD), Additional duties of excise(ADE), and any other indirect central levy, VAT, sales tax, luxury tax, entry tax ,entertainment tax, purchase tax, Octroi, taxes on lottery,Central sales tax (CST)

[2] hosted at https://www.gst.gov.in/

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