Two years on from the introduction of India’s Goods and Services Tax (GST), Big Four accounting and advisory firm PwC has released detailed analysis of the current scenario surrounding the new tax regime.
GDP growth, inflation and fiscal deficit are three of the GST’s highest impact areas, according to the firm.
The new regulatory paradigm was rung in under the banner of ‘one nation one tax,’ with the specific objective of streamlining the administrative procedures surrounding tax payments by bringing it under a single umbrella system. Revenues from the new indirect tax regime have been steadily high.
As the GST completes two years, a number of experts and market watchers have offered their take on the strengths and weaknesses of the framework. Some have highlighted the GST’s effectiveness, while others point out that revenue collection under the GST is falling considerably short of government targets, indicating the need for improvement.
PwC has been tracking progress of the GST since it was rolled out, and has now offered insight into the process through which it was evolved. The first year of GST was characterised by some resistance within the Indian business environment, according to the firm.
As a result, most government efforts in the first year after rolling out were concentrated on firefighting and easing the friction amongst businesses. A number of businesses in the country were struggling with restructuring their administrative operations to better comply with the new regime.
Over time, most businesses came within the compliance framework – with some help from the consulting industry – which freed up government resources to tweak the legislative framework, based on common themes that emerged in the first year. Since then, the government has been engaged in a balancing act.
In the last year, the government has been justifying its tax rates to stakeholders of various sectors and offering sector specific insights into the taxation regime. According to PwC, this phase of navigation has been handled adeptly by the government, which has led to a promising scenario with respect to the GST.
“Although still in its infancy, over the last two years, GST has proven to be a positive tax reform and has significantly boosted India’s industrial growth. It has enabled standardisation and simplification of processes and reduced India Inc.’s interface with the tax authorities,” states the report.\
One development that has helped smoothen the GST implementation process has been the digitalisation of compliance procedures across sectors. The government’s compliance system is automated, which produced a number of technical glitches to begin with, but has since gained a degree of stability.
The newfound stability was the result of a specialised government committee that was established to solve the IT glitches. Should any more technical issues emerge, the government has also established a portal for IT related grievances, which offers support for those struggling to pay their taxes. PwC highlights further investments being made by the government in technological integration.
“Relevant technology has been upgraded in the past year to accommodate multi-level requirements under GST and make the portal more interactive. The Government seems to be on the right track in achieving its goal of easing automated compliance-related processes, and is now diving into deeper waters with its implementation of the E-Invoicing system and revamping of the compliance process, which rely heavily on the bandwidth of the GSTN portal to take on huge data loads and their processing on a real time basis,” said the firm.
Published On : 22-07-2019
Source : Consultancy India
