July 1, 2017, was the date of the implementation of the Goods and Services Tax. It is an indirect form of tax. It is one of the landmark steps taken by the Government in the taxation field since independence. The main aim was that the Centre and the States would pull in their Constitutional Powers to tax and share the responsibility to oversee the GST regime. It is impertinent to study its impact on the businesses and the economy as a whole. The implementation was an uphill task but it is necessary to understand the opinions of various stakeholders of this tax regime. Items under GST are taxed in five tax brackets: zero per cent, five per cent, 12 per cent, 18 per cent and 28 per cent. Some items such as petrol, diesel and liquor are, in fact, not included in GST.
GST has absorbed or abolished all the taxes both at Centre and State levels. It has simplified the tax regime. It has promoted the ease of business. The main concern was the impact of GST on inflation. It can be observed that the food items with a larger weight on the CPI basket have been exempted from GST, thereby minimising GST’s impact on food items. GST is expected to expand the tax net. It can be observed that as on April 1, 2018, the tax collection was 1 trillion. Another feature was the introduction of an e-way bill which has minimised the cost and time of transportation of goods across states. The GST law introduced a mechanism for taxpayers to get advance rulings, to avoid future disputes with the department.
The problems that were seen during the implementation of GST were the technical glitches in the GST portal and untimely filing of the tax returns. The requirement of filing multiple returns along with multiple GST rates led to another problem. As a respite to the same, the Government introduced electronic filing of letters of undertaking (LoUs) and automatic adjustment of tax liability with credit or cash. But the slow rate of response has been a concern. GST refund has been another issue where many exporters were unable to file tax refunds for input tax credit thereby impacting the cash flow. It was expected that the property prices would have decreased. The registration fees and stamp duty has not been subsumed in the GST. The homebuyers are trying to buy homes in the under construction projects to save the 12 percentage GST. Developers are of the view that more clarity is required on the abatement available for the land cost to calculate service tax on under-construction projects.
The GST Council has been trying to simplify the laws. The GST council has already reduced rates for more than 175 items. Further, the GST panel has identified almost 180 issues and put forward its suggestions before the GST Council. Some of the suggestions can be single registration for a taxpayer across India, The definition of supply under Section 7 of the CGST Act can be changed, petroleum products can be included under GST and return filing processes can be simplified.