GST in India was implemented on 30th June of 2017.
The vision was to transform the indirect tax regime. Synching it with technological advancements was seen as a complexity breaker.
Let us see how much area has been covered and what is yet to be done.
On this occasion, Ministry of Finance posted several tweets. The Government pointed out some benefits of GST which are as follows:
- A company looking to do business in every state had to make as many as 495 different submissions. Under GST, that number has reduced to just 12.
- Under GST, compliance has been improving steadily, with around 1.3 Crore taxpayers registered.
- Overall, GST rates have been reduced on 400 goods and 80 services. Given that, in the pre-GST regime, the combined Centre and States rates were more than 31% on most of the items; this reduction marks a significant relief for the taxpayer.
- Common-use items such as hair oil, toothpaste, and soap have seen their tax rates come down from 29.3% in the pre-GST era to just 18% under GST.
- Appliances such as fridges, washing machines, vacuum cleaners, food grinders and mixers, shavers, hair clippers, water heaters, hair dryers, electric smoothing irons, TVs (up to 32 inches) have all seen tax rates lowered from 31.3% to 18% due to GST.
- The tax on cinema tickets, earlier anywhere between 35% to 110%, has been brought down to 12% (where ticket rate is up to Rs 100) and 18% in the GST regime.
- Most items of daily use are in the zero or 5% slab. The construction of residential complexes saw a steep reduction in rates to 5% in general and 1% for affordable houses. Restaurants were also brought down to 5%.
- Substantial concessions have been extended to the agriculture sector in GST. On fertilisers, the net tax incidence was halved in GST. On agricultural machineries, the tax incidence has come down significantly from 15% / 18% to 12% and on certain items from about 8% to 5%.
- The pre-GST tax incidence on chemical fertilisers was above 10%. (1% excise duty, 2.44% embedded excise duty, about 4% weighted average VAT and 2.5% CST, Octroi, etc.) while in the GST regime all types of chemical fertilisers only attract a 5% tax rate.
- Cattle feed, aquatic feed and poultry feed have all been kept at a Nil rate in GST, as have all kinds of seeds. In other words, these vital inputs in the agricultural process do not attract any tax under the GST system.
However still there are some pending issues, which have caused a lot of turbulence in the professional community and among taxpayers.
But many people provide an argument that countries all over the world which have shifted to GST regime in the past, saw an inevitable unstable taxation system for at least 10 years.
Like for example, in Australia GST was implemented in 2010, and it took 10 years for all issues to get resolved. We hope GST problems faced by taxpayers in India should also be eradicated soon.