GST: India’s biggest tax transformation

Goods and Services Tax (GST) is the biggest tax reform since independence and will pave the way for realization of the goal of “One Nation – One Tax – One Market” in the country. GST will benefit all the stakeholders namely industry, government and consumer and will help in lowering the cost of goods and services thereby making the products and services globally competitive, giving a major boost to ‘Make in India’ initiative.

GST will come into effect from July 1, 2017 with the celebration at the Central Hall of Parliament on the midnight of 30th June – 1st July, 2017 to be be graced by the President, Vice President, Prime Minister, Speaker of Lok Sabha, Union Finance Minister and other dignitaries.

GST will completely transform the indirect taxation landscape in India  involving both the central and state levies. In a departure from the normal practice, GST will be administered together by the centre and states.

Under the GST regime, exports will be zero-rated in entirety unlike the present system where refund of some of the taxes does not take place due to fragmented nature of indirect taxes between the centre and the states.

GST is largely technology driven and will reduce the human interface to a great extent. GST is expected to improve ease of doing business in India.

Some Info/Statistics on GST: 

1. Since its formation in September, 2016 the GST Council has held 18 meetings.
2. The historic tax reform has involved 27,000+ man hours of intensive work and more than 200 meetings of the officers of the centre and states took place in different parts of the country
3. The threshold limit for exemption from levy of GST is Rs. 20 lakh for the states except for the special category, where it is Rs 10 Lakh
4. A four slab tax rate structure of 5%, 12%, 18% and 28% has been adopted for GST. A cess would be levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the GST rate of 28% for payment of compensation to the states.
5. GST also facilitates the taxpayers by prescribing grant of refund within 60 days, and provisional release of 90% refund to exporters within 7 days
6. GSTN has been provided with a robust IT platform and will provide interface to 80 lakh taxpayers and thousands of tax officials
7. 64,000 officials have been trained on the GST portal from February till June 2017
8. More than 66 lakh taxpayers have activated their account at the GST portal
9. 25 banks have been integrated with the GST Common portal and will be providing e-payment and over the counter payment facilities as well as payment through NeFT/RTGS and credit/debit card
10. CBEC has conducted 4,700 workshops pan-India
11. Central Board of Excise and Customs (CBEC) has been reorganised into 21 CGST & CX Zones, 107 CGST & CX Commissionerates, 12 Sub-Commissionerates, 768 CGST & CX Divisions, 3969 CGST & CX Ranges, 48 Audit Commissionerates and 49 Appeal Commissionerates
12. National Academy of Customs Indirect Taxes and Narcotics (NACIN) has trained = 71,824 people
13. Approved GST Training Institutes have trained = 2,565 people

The challenges with respect to GST implementation are: transitioning period for the GST regime; corporate adjustment to the new tax regime w.r.t. scrutiny; doing away with anomalies of input and output tax; enforcement issues both at the centre and state governments; and incorporating new learnings back into the GSTN process to make it more robust. Once these challenges are overtaken, it is executed that India’s GDP will grow by 2 per cent.