The implementation of the Goods and Services Tax ( GST ) in India was a monumental shift aimed at streamlining the complex taxation system. However, like any significant reform, the GST regime has encountered its fair share of challenges.
In this article, we will delve into five critical issues that have emerged, casting a shadow on the otherwise ambitious GST framework.
1. Multiplicity of Tax Slabs
One of the persistent challenges with the GST regime is the multiplicity of tax slabs. The initial vision was to create a simplified tax structure, but the presence of multiple slabs has led to confusion and complexity. This diversity in tax rates not only complicates compliance for businesses but also blurs the intended clarity of a unified tax system.
Currently the most common GST rates on goods in India are 0% or nil rated, 5%, 12%, 18%, and 28%. Two of the lesser common GST rates applicable to goods in India are 0.25% and 3%. In other cases, such as the GST composition scheme, slightly lower GST tax rates of 1.5%, 5% or 6% are applicable.
2. Compliance Burden
While GST intended to simplify tax procedures, the compliance burden on businesses has increased significantly. Small and medium enterprises ( SMEs ) often struggle with the intricate filing processes and periodic returns. This compliance burden not only consumes valuable resources but can also result in inadvertent errors, leading to legal complications.
3. Delayed ITC Refunds & Penalties for Belated Filings
A major concern for businesses operating under the GST regime is the delay in Input Tax Credit (ITC) refunds. Timely refunds are crucial for maintaining a healthy cash flow, and any delay can adversely impact businesses, particularly SMEs. Furthermore, penalties for belated filings create additional financial pressure, underscoring the need for a more efficient and responsive system.
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4. Ambiguity in Anti-Profiteering
The concept of anti-profiteering under GST was introduced to ensure that businesses pass on the benefits of reduced tax rates to consumers. However, the lack of clear guidelines has resulted in ambiguity, making it challenging for businesses to determine compliance. This uncertainty can potentially lead to legal disputes and hinder the intended positive impact on consumers.
5. Technical Glitches in GST Portal
Despite efforts to digitize and streamline the taxation process, technical glitches in the GST portal remain a persistent issue. Businesses frequently encounter challenges in filing returns, generating e-way bills, and navigating the portal for various processes. Addressing these technical issues is crucial to maintaining the efficiency and reliability of the GST framework.
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While the Goods and Services Tax ( GST ) was envisioned as a game-changer in India’s taxation landscape, it is essential to acknowledge and address the challenges hindering its seamless implementation. The multiplicity of tax slabs, compliance burden, delayed ITC refunds, ambiguity in anti-profiteering, and technical glitches in the GST portal are some of the key issues that demand attention.
A concerted effort from policymakers and stakeholders is necessary to iron out these wrinkles, ensuring that the GST regime achieves its intended objectives and fosters a conducive environment for businesses to thrive.
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