Hailed as the biggest tax reform post independence, the Goods and Service Tax (GST) at present is at centre of debate that has ensued on the reasons that has led to deceleration in the Indian economic growth. Experts are out with narratives on both sides! Ahead of forthcoming general election in 2019, the India’s transition to the GST regime do have deep political interests as it could be one of the influencing factors in mind of people of India, when they go to assert their democratic right to vote for their chosen government.
Fortunately, the India Inc through its leading industrial bodies have backed the said reform and intent of the present Narendra Modi government, which rolled out the GST regime from 1 July 2017. Here, applauding the efforts, Chandrajit Banerjee, Director General, Confederation of Indian Industry (CII) stated that since the launch of GST, Government has left no stone unturned and the GST Policy Wing, GST Council and senior officers of the CBEC have been proactively engaging with the industry in spreading the awareness in terms of issuing FAQs, issuing clarifications and addressing concerns of the industry with the intent to help implement GST. In fact, Several CII requests have been considered to fine-tune GST Law, tweaking GST Rates and clarifying provisions, which are indeed helpful in successful transition to GST, said Banerjee.
“Today, we need to handhold the industry, especially the MSME sector, emphasised Banerjee. For ease of doing business especially for the MSME, provisional Input tax credit period may be extended to 6 months from the current 2 months’ period; this will help cross matching of invoices through the GSTN portal and also save the blockage of the working capital for the small players,” said Banerjee.
Most importantly, the Industry has meticulously put focus on the agenda of fine tuning glitches the transition. “While it is understandable that in a democracy any one can criticise the Government of the day, a distinction should be made between political criticism and grievances of trade and industry,” added The Federation of Indian Chambers of Commerce and Industries (FICCI) communique.
“FICCI has whole heartedly welcomed the introduction of a Goods & Services Tax (GST) – a revolutionary fiscal initiative taken unanimously by the Central Government and members of the GST Council representing different State Governments and political parties. The introduction of GST was a major step towards the modernisation and integration of the Indian economy. It is understandable that in the course of implementation of such a radical policy change, there will be teething troubles and unanticipated problems. This does not mean that the policy changes should be rejected,” the communique added.
“FICCI would urge members of the GST Council to quickly address the issues that have been thrown up in the implementation process. FICCI has suggested changes in some of the existing provisions based on the feedback received from producers, traders and consumers. Such changes will have to be made from time to time based on the actual experience of implementation of any new and radical scheme. In itself GST is a welcome initiative and FICCI compliments the Union finance minister Arun Jaitley and members of the GST Council for leading this change”, said Pankaj Patel, President, FICCI.
Further pointing at specific issues at hand, Banerjee opined that filing of GST Return may be made on a quarterly basis, as against the current monthly filing requirement as the MSME sector is still not well equipped with the IT infrastructure and a qualified manpower; this small measure will help bring them into the GST mainstream.
Another issue which need attention is the reverse charge mechanism (RCM). Under RCM, threshold exemption for payment of tax may be increased from the present Rs. 5000/- to 50,000/- which shall help ease burden of excessive compliances especially for the MSME players. Format of Returns may also be simplified and only basic core details may be required to be furnished, suggested Banerjee. He also highlighted issues related to exporters and suggested that Government may consider special initiatives for promoting exports, including by addressing teething troubles for exporters under the GST regime.
Payment of IGST for imports under Advance Authorisation, EPCG and on advance receipts adds to credit requirements of manufacturers and raises costs. All import duties including IGST should be allowed to be debited under Advance Authorisation as the authorisation is utilised for self and the finished goods manufactured from imported material is exported. Further, advance receipts for exports should be exempted from payment of IGST added Banerjee.
Another important issue is that under VAT/CST, merchant exporters could purchase goods without payment of tax on furnishing of a declaration form. This provision needs to be added under the GST law so that refund of tax is faster and capital is not held up. Currently, the tax for inputs for exports is needed to be paid directly even though provision for refund is provided. Further, delays in filing of GSTR 3 should be addressed for quick refunds of IGST paid on exports, stated Banerjee.
Goods and Services Tax (GST) was implemented on 1 July, 2017 with a view to create a common national market by amalgamating multiple central and state taxes into a single tax regime. Implementation of GST across the country has been a success so far, barring initial technical GSTN hiccups, which have also been addressed. Payment of tax on a single GSTN platform, seamless flow of input tax credit (ITC) and removal of various state barriers for smooth movement of goods across Sates is the mainstay of the GST reform; commended Banerjee