One Nation One Tax One Year - GST One Year

What has worked?

1.     Inflation rate didn’t Rise

GST, it was widely fear that would cause increase in inflation rate as happened in many countries but that doesn’t happened in India.

2.     Single National Market

Long queues of trucks at state borders disappeared as checkposts were dismantled, creating a seamless national market. These barriers have restricted movement of goods across the country.

3.     One tax Nationally

GST has allowed businesses to streamline distribution systems – production, supply chain, storage – to make them more efficient, having previously being design them keeping state taxes in mind.

4.     Tax Base begin to Widen

With number of registration crossing 10 million from 6.4 million under existing laws, it seems more businesses are signing up for GST. Rise in Employees Provident Fund Organisation (EPFO) subscriber base provide further evidence of the same.

What hasn’t worked?

1.     Compliance has miles to go

The biggest restrain was the compliance process, as information technology glitches took more than the anticipated time to be resolved. The filing system that was put in place in the beginning was quickly abandoned as businesses struggled with compliance.

2.     Cumbersome registration system

Multiple registration requirements have complicated things for industry, which was expecting simplicity. In many cases registration was required in all states. Company’s fear that multiple audits and assessments due to multiple registrations could make life more difficult for them.

3.     New cesses crop up

While GST has scrapped multiple taxes and cesses, a new levy in the form of compensation cess was introduce for luxury and sin goods which was later expanded to automobiles. A new cess on sugar is also being examined.

4.     Too many tax slabs

There are as many as Six tax rates and one “nil” rate. Too many rate lead to classification issues and tax disputes, distracting from the simplicity of a single tax that GST should have been.

5.     Refunds problem for exports

The refund mechanism for exporters have irked the sector, particularly smaller entities that saw their working capital requirements rise.

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