ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Functional, but Incomplete

The goods and services tax is a work in progress that is far from complete.

One year into the introduction of the goods and services tax (GST) in India, the initial teething troubles seem to have eased. Some issues regarding classification of commodities into rate categories have been addressed, while difficulties with filing of returns too have been temporarily addressed. One of the significant achievements of the GST regime is the considerable increase in the number of taxpayers registered. While timely compliance in terms of filing of returns is limited to less than 70% of the taxpayers, given time, more than 90% may be filing returns.

That said, GST continues to be a work in progress for a number of reasons. First, there is a general agreement that there should be fewer rate categories in the regime, with some arguing for a single rate and others settling for two or three rates. With the finance minister alluding to the possibility of rationalisation of rates of tax depending on improvements in revenue productivity, it is clearly one front on which the GST regime is far from settled. Second, the format of returns is yet to stabilise: while the GST council seems keen on maintaining a mechanism for invoice matching in the design of the returns, once again the pronouncements on the matter suggest that a series of changes are on the anvil. Third, there are certain activities that remain beyond the scope of GST: crude petroleum, natural gas, petrol, diesel, aviation turbine fuel, electricity, alcoholic beverages, and certain real estate transactions. It is important to recognise these features before one attempts to explore the impact of GST on the economy and on revenues. While the introduction of GST was expected to have a significant positive impact on the economy as well as on revenues, the impact would be realised only gradually when the reform of GST is completed.

Dear reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Updated On : 9th Jul, 2018

Comments

(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top