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A look back at the past five years shows that GST hasn’t been the game-changer that was promised. Shivanand Pandit reports

Five action-packed years, 47 GST council meetings, manifold tax rates, and several boundaries set on obtaining input tax credit. Appellate tribunals yet to be established. Hostile assessment orders and many technical glitches. This is a synopsis of the Goods and Services Tax (GST) regime, which celebrated its fifth anniversary on 1 July. Five years is a decent length of time to raise the question: Has GST been the game-changer as it was advertised? Regardless of who asks the question, the response is not a resounding “Yes”.

Five years ago, the Central Hall of the parliament launched a new indirect tax system for the collection of GST. Flaws and faults in the previous system, such as the cascading effect of duties, an extensive range of local taxes along with central taxes and duties, and non-integration of tax management forced the government to introduce “One Nation – One Tax”.

Taking into consideration the enormous size of the nation and the difficulties involved in getting everybody on board, the GST’s performance has been average, despite the repeated contrary claims of the government that it has been a success. The introduction of a GST brought numerous positives including a unified national market from Kashmir to Kanyakumari, cessation of a cascade of taxes, check post-free state borders, condensed inducements for tax circumvention, and the replacement of several indirect tax laws and rules.

But the many compromises made along the way to bring more than one billion people living in 29 states on board have been damaging to this revolutionary tax reform. Since its launch, the collection of GST has been more or less constant, excluding a few months during the pandemic. July 2022 witnessed the second-highest collection of GST after April 2022, at INR1.49 trillion (USD18.7 billion). The figures are very encouraging as far as the central government is concerned, but the same is not the case at all state and territory levels.

A WELCOME CHANGE

In the past five years, implementation of a GST has witnessed numerous policy changes together with procedural and technical repairs. A few of these have substantially altered the face of the tax system. These include:

E-invoice

The launching of the e-invoice system in India on 1 October 2020 was a bold change, demanding the assessee to authenticate each tax invoice via the GST government portal before issuance. The government took a segmented approach to the law, beginning with companies having a turnover of more than INR5 billion. At present, all companies with a turnover above INR200 million are included, giving the law broad coverage. However, according to the latest notification, e-invoicing will be implemented from 1 October 2022 for business entities with an annual turnover above INR100 million. Although companies initially dealt with technology-linked problems, the law has now been accepted as a way of doing business in India.

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