GST celebrated its second birthday on 1 July, 2019 and we have more than one reason to cheer. The two years of implementing and evolving the gigantic law has made us all learn a lot of things about businesses and taxation and the impact that these create on the economy. Initially where the launch of GST caused huge implementation challenges with multiple monthly returns and due dates, they also negatively impacted businesses causing the overall disappointment amongst traders and industry alike. However, with the rapid changes brought about by the GST committees and the continuous decisions taken by the GST councils to improvise the processes have made GST a successfully implemented biggest tax reform.
Here are a few interesting facts and turning points in the GST explained here in the journey till date:
- GST launches amongst a lot of pomp and show to make ‘One Nation One Tax’ a reality to subsume 17 indirect taxes on 1st July 2017
- GST collected majorly under the heads or types of GST namely CGST, SGST, IGST and UTGST with four slabs of 5, 12, 18 and 28 percent
- Certain goods like the petroleum, alcohol, tobacco and stamp duty on real estate were kept out of the purview and still are
- Most daily use items were already charged @ zero rate and later over the period of these 2 years more items were brought down to either 18% or lower rates
- Taxpayers were classified under regular taxpayers, composition scheme taxpayers, Input service distributors, casual taxable persons and non-residents
- Different set of forms applicable to different taxpayers based on their classification and whether they are supposed to deduct tax at source or collect tax at source
- Returns under GST were a major roadblock when it came to compliances under GST with GSTR 1 2 and 3 being monthly returns for regular taxpayers
- These returns were later brought down to only filing GSTR 1 and 3B and made the compliances a bit easier
- Transport of goods underwent major change with introduction of E-way bills where the traditional Delivery challans were replaced by E-way bills that would keep track of inventory being moved from one place to another
- IRN was introduced during this phase too where on filling up GST INV-01 taxpayers could generate an IRN for the invoices related to the goods being transported and quoting of IRN would replace physical copies of invoices
- Overall the Input Tax credit system under GST proved to be big tax saver for businesses since they saved on taxes and hence increase in profit margins
- Tax evasion and low compliances in GST led the government to improvise on the compliance procedures and hence the returns systems were further changed
- Annual GST return forms launched and GST Audit rules were launched and after several extensions the date to file Annual returns for the first year is now 31st August 2019
- Simplified returns were introduced in the meanwhile in the second year to be launched in July 2019 but this has been further deferred to October 2019.
- E-invoicing was introduced in the latest GST Council meeting that recommended to launch the e-invoices for B2B by January 2020 to further reduce the menace of tax evasion and fake invoices used for claiming false ITC claims. Ultimately IRN would be generated for e-invoices and these would replace e-way bills too in the longer run
Overall the first 2 years of GST have been eventful and full of learning experiences. Although there were difficulties but the advantages of GST have been many and importance of GST in boosting the economy will soon be felt. A huge wave of tax reform has been quite successful with a bit of hiccups but then what is a journey worth if its not full of hurdles and lessons to be learnt.