Modi Budget@10: GST overcomes several obstacles; it's time for a pole jump with the combination of slabs and gasoline

 Modi Budget@10: GST overcomes several obstacles; it's time for a pole jump with the combination of slabs and gasoline

Modi Budget@10: GST overcomes several obstacles; it's time for a pole jump with the combination of slabs and gasoline

After achieving a number of significant milestones, such as e-way bills, e-invoicing, tax scrutiny for compliance, and enhanced technological capabilities, the next phase of GST must go further with the combination of tax slabs and the introduction of gasoline Is. Diesel and electricity go under this.

There are already 1.4 crore registered taxpayers, up from 65 lakh in the first phase. This is a notable increase of more than 100% in the previous six years.

Ever since the Goods and Services Tax (GST) was introduced in a lavish event at the Central Hall of Parliament on July 1, 2017, the new indirect tax system has gradually overcome its initial challenges and is now prepared for use as a vault.

After achieving a number of significant milestones, such as e-way bills, e-invoicing, tax scrutiny for compliance, and enhanced technological capabilities, the next phase of GST must reach even greater heights with the combination of tax slabs and the inclusion of gasoline, diesel, and electricity under the tax regime.

Being a relatively young tax system, GST is supported by a number of accomplishments. There are already 1.4 crore registered taxpayers, up from 65 lakh in the first phase. This is a notable increase of more than 100% in the previous six years. In the first year of the GST, 2017–18, monthly income was about Rs 0.9 lakh crore. As of November 2023, the average collection is Rs 1.66 lakh crore.

Is it now appropriate to tackle the most difficult questions under the GST system and establish the new indirect taxes as the most effective, given that the preliminary streamlining has been completed?

Several important metrics illustrate the GST's growth trajectory during the last six years.

E-Way Bill: As a result of increased compliance, the monthly total for e-way bill production has surpassed Rs 10 crore. On April 1, 2018, the e-way bill system was implemented for the interstate transportation of products across the nation. It is now required for commodities valued at Rs 50,000 or more.

Capacity of the GST Tax Filing Portal: Three lakh returns may be submitted in an hour thanks to the GST portal's enhanced capacity. It is often anticipated that this will help dealers file returns to some degree.

Over Rs 1 lakh crore in monthly GST revenue: Monthly collections for July 2017, the first month of the GST, were Rs 92,283 crore. Up till November 2023, the average monthly GST revenue was Rs 1.66 lakh crore.

Growth of the registered tax base with economic formalization: The significant expansion supports formalization of the economy under the GST system and a wider tax base. At first, a steady rise in GST compliance was seen. Out of the 6.8 million enrolled taxpayers, only 3.8 million submitted GSTR 3B forms before the deadline in July 2017, the first month. Eighty percent of taxpayers submitted GSTR 3B before the deadline by July 2023.

Crackdown on phony bills: In 2023, the GST department initiated a special two-month campaign to combat fraudulent invoicing in a variety of industries, including scrap. 24,000 fictitious organizations worth Rs 63,000 crore in false invoices were discovered.

Top 5 GST Errors

Online gaming irregularities: For suspected GST evasion of Rs 1.12 lakh crore, the Directorate General of Goods and Services Tax Intelligence (DGGI) has issued 71 show cause letters to online gaming enterprises. The notifications are predicated on the idea that all real money games come under the category of betting, even though online gaming was previously subject to an 18% GST tax and betting was subject to a 28% GST tax until October 1, 2023. Litigation cases have proliferated as a consequence of this.

Fuel and electricity inclusion under GST: To yet, the GST Council has not succeeded in including fuel and electricity within the GST system. Manufacturers and refiners may lower prices by utilizing input tax credits to partially offset their tax burden once they are subject to the GST system.

Combination of rate slabs: Since there are many rates under the Goods and Services Tax (GST), a group of state ministers was established to recommend combining the 12% and 18% slabs into a single 15–16% tax. However, no proposal has been made as of yet. has not been completed.

Producing states are complaining about income loss under the goods and services tax, or GST. The GST is a consumption-based tax. Because Chhattisgarh is a producing state with abundant natural resources, it has alleged that the GST system causes it to lose Rs 3,000 crore annually on coal alone.

GST Tribunal Delay: After the GST legislation was implemented, it took many years for the GST Appellate Tribunals to be formed. They are now anticipated to start operating in the next fiscal year.

specialists discuss

The Model GST Law, which harmonizes all national processes, regulations, forms, and case laws, has been crucial in easing this transition. According to Rajat Mohan, senior partner at AMRG & Associates, "this coordination has in addition to simplified tax compliance but also enhanced accountability and transparency through the taxation process," he told Moneycontrol.

The rationalization of tax rates is one aspect of the reform. Over 200 goods were placed in the 28 percent tax band during the first phase of the GST implementation. This now only consisted of eight pieces. Tax rates have also been lowered for a number of products and services. For instance, the 18% GST on restaurant services was lowered to 5%.

Another significant accomplishment has been to streamline return submission. The provision originally included yearly returns in addition to three monthly returns covering sales, purchases, and an aggregate return. The GST Council got rid of the need for purchase returns in response to corporate complaints about the hassle of filing 37 forms annually. Consequently, companies are now required to submit only two returns: GSTR 1 for sales and GSTR 3B, which is a composite report, according to Mohan.

The sector feels that it is now appropriate to implement forward-looking changes as part of the GST's next phase. These include simplifying some requirements, broadening the GST's application to all industries, and facilitating companies' ability to obtain working capital.

"The employment of technology with enhanced capabilities has steadily increased during the last six years. The next phase is to transition to an all paperless economy. In addition to the ongoing audits and evaluations, a strong dispute resolution process must be put in place immediately because of the statute of limitations. The creation of the GST Tribunal, which is long delayed, is a crucial first step in this process, Deloitte partner Mahesh Jaising told Moneycontrol.

Experts believe that ongoing improvement and improvement should be part of the GST system's future objective.

"This might include expanding the GST's reach to encompass other industries like energy and petroleum, operationalizing GST Appellate Tribunals, streamlining rate structures, implementing an application programming interface (API) for e-notices, and implementing a sunset provision for anti-notices like commerce This involves modernizing technology to make tasks easier. In order to prevent high lawsuit expenses, most organizations should prioritize profitability and clear communication on common concerns. According to Abhishek Jain, a partner at KPMG, "it aims to further improve the GST framework, making it more robust, taxpayer-friendly, as well as conducive to the economic growth of the country" (Moneycontrol).