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INDIRECT TAXATION- TWO YEARS OF GST (Successes of GST (Use of technology…
INDIRECT TAXATION- TWO YEARS OF GST
About Goods and Services Tax (GST)
GST is a destination-based indirect tax and is levied at the final consumption point
Under GST, a gamut of 17 indirect taxes like excise duty, VAT, service tax, luxury tax etc are subsumed
Benefits
for Government
easier to collect and reduces tax evasion
for customer
easier to understand & will reduce tax burden
for industry
no cascading effect of the tax
harmonization of tax laws, procedures and rates of tax
Successes of GST
marks a fundamental resetting of the Indian economy
Tax Compliance:
successful in increasing compliance through Composition Scheme
small dealers up to a turnover of Rs 1.5 cr can opt for composition scheme and pay only 1% tax, facing a lesser compliance burden
single online system from filings to returns
Self-policing mechanism of GST helps to check tax evasion and expand the tax net
Revenue Base
Revenue Collections and Buoyancy
Rationalization of taxes
Re-engineering of supply chain
Introduction of E-Way Bills
E-Way bill marks a shift from departmental policing model to self-declaration model for movement of goods
Use of technology
Reduced the interface
High quality quantifiable data
improve GDP estimation
Reinforces Cooperative Federalism
Challenges
List of exclusions
Petroleum products (crude oil & natural gas), diesel, petrol, aviation turbine fuel,
potable alcohol and real estate, which contribute 35-40% of indirect tax revenue, are still out of GST’s ambit
Complex GST Structure with multiple tax slabs
Digital infrastructure and data privacy
GST required registration at humungous scale for input based tax crediting
creating a common database of registered traders to be managed centrally
Technical glitches: Introduction of E-Way Bill was delayed due frequent website crashes
Anti-profiteering norms
implementation of the regulations is facing several roadblocks
Way Forward
GST taxable base must include petroleum products especially aviation turbine fuel and natural gas, real
estate and electricity. Inclusion of real estate will clean up the land market and will lead to revenue gains. on direct tax side as well as more transactions will be reported.
Revenue performance of Composition Scheme needs to be improved
single authority for sanctioning and processing GST refunds
low standard or modal rate with a small list of exemptions