GST in India – a discussion which had been in the works for almost 10 years finally went live on July 1, 2017. Since then there are a lot of complaints around and lot of defending points as well. In this post I wanted to jot down my real life experience with GST as an MSME who deals with products & services both to the Organized Sector, Unorganized Sector & Consumer as well.
Areas that are in favor of GST in current method of Implementation & practice
1. Understanding Taxes across Businesses, states has never been this easier.
During the Pre-GST period our Indirect Tax Structure was really complex – it had an excise component, Vat Component, CST Component, Service Tax component and each of them had their own filings and monthly visits to the respective Tax offices for Return filings . Adding to the complexity, CST becomes part of a landed cost, Excise can be passed on to Manufacturers but not traders, VAT can be passed on, some did business with excise inclusive, some exclusive, there was the Octroi component in few states .. Whew.. It was a mess to be honest.. So many different components – all that is bundled into three – SGST, CGST & IGST – there is no differentiation from a Product related Tax or Service Related Tax . Concept of Excise is disappeared and bundled part of GST. Made it easy for Inter state business transactions.
2. Filing of Taxes made simple
uring the pre-GST period – if a company is handling Excise products, doing CST sales, Vat Sales, Service Tax – they have to fill all four different tax elements in four different offices. Each had their own assessment method, office, visits & etc etc. Post GST we got all this merged into GST & all done electronically – the monthly mandatory visits for filing taxes are not necessary
3. Billing & Accounting has become simpler and easier to track
During the pre-GST period – since we had 4 major tax components -Accounting ledgers were complex too- during the end of every month we had to ensure Excise Ledger, Vat Ledger, Service Tax ledger & CST Ledger are all correct and with multiple levels of VAT ( say 5% or 12.5% or 14.5% ) had their own sub-categories to be verified & updated.
Areas that are NOT in favor of GST in current method of Implementation & practice
1. Ensuring Compliance of suppliers
In the current system – Suppliers Non-compliance of paying taxes is affecting the Customer – ex. If my supplier doesn’t pay my taxes then my Tax Credits or Refund Adjustments are not happening. I think this is pretty bad- Compliance of any tax payer is Governments role and not any supplier. Most MSMEs and Smaller organizations do not have manpower to follow each supplier and track down if he is paying his taxes properly.
2. Clarity of Acts, Notifications, Definitions in relation to the Older System
While the Acts and circulars are quite detailed and thorough – still there is big gap in understanding of certain elements. Most officers, most Tax Experts or Subject Matter Experts are confused and still failing to let go of the legacy system because of their inability to comprehend the simplicity GST brings. Many times they still live in the olden world which no longer exists post GST
3.Clarity of Refund Process & Speed of Refund Process
This is a major Red when it comes to GST implementation. With respect to the GST process there is serious lacuna in understanding of the entire process amongst all stake holders – supplier, customer, tax official, customs official, auditors, tax consultants etc. Though there are enough documents defining how the process should be followed there is still lot of manual intervention which is creating chaos in the system. Most refunds are stuck and exporters & SEZ suppliers are bleeding money because of the slowness of the Refund Process. Despite the Governments Push towards Digital India and Introduction of Electronic Credit Ledger & Online Portal for GST – there is bucket load of paper work to be done and sometimes it feels we are moving way too slow and there is a serious gap in the vision & implementation.
These are few areas based on my real life experience. I am sure every GST Registered person will have their own views.
Overall GST implementation is definitely a welcome change, needed step in the right direction- but lots of core areas to fix!!!
Positives – Simplicity in filing & invoicing, easier to follow & account
Negatives – Heavy burden on Tax Payers, Clarity of Acts, Speediness of Refund Process.
If I missed out anything or something is not right please do let me know. This GST process is a journey and I am sure this will improve as we march forward.
No comments:
Post a Comment