Is There A Need For Macro Level Overhaul Of GST In The Coming Years?

Every established economist and lawyer will relate to the fact that the revolutionary goods and service tax is still a work in progress. Though the Indian government claims that GST will boost the overall economic growth of the nation, many sectors like manufacturing and telecom are still not satisfied with the latest reforms and tax-related laws.

The GST council has been criticized many times for its unrealistic and insensitive measures to collect the tax. There is a tremendous rise in the demand to have better reforms that solve the unheard problems of taxpayers.

The world bank declared the GST, one of the most complicated indirect tax structures in a report after analysis of the tax system implemented by 115 countries.

GST and its components may seem challenging to understand for an ordinary taxpayer. For instance, igst full form, Integrated goods and service tax being the sum of CGST and SGST. The calculation can seem complicated to a few.

There is no doubt that the goods and service tax need extraordinary reforms in the coming years to make it best for both government and taxpayers. Let us look at some of the main issues that the GST council must consider while drafting the next reform.

Permission To Rectify Technical Mistakes By Taxpayers

Since GST is still new and has a very complicated online procedure, there are fair chances of technical mistakes. There was an option to revise the return in several taxes like VAT, central excise, service tax, and even in the income tax returns. The council must consider introducing a clause that allows taxpayers to rectify these technical mistakes.

Relaxation In Return Late Fees

Businesses, traders, and all types of taxpayers are still trying to understand GST, the most complicated tax structure in the world. At this early stage of the GST, the Indian government should make a provision for refund of late fees. The lawmaker should consider the problem associated with GSTR-10 that is a big problem for traders.

Paying interest till the date of set-off of the tax

When a dealer deposits the tax in the bank, it gets transferred to the government exchequer on the same day. But he will be charged interest to the date till the tax is set-off.

Charging this interest is unjustified as setting off the tax is a technical procedure, and the dealer has already paid the tax to the government through the required challan.

Inadequate Capacity Of GST Network

GSTN (GST Network) is the biggest problem since the inception of GST in the country. The network always crashes before due dates of the returns and fails to provide the required capacity to meet the needs of taxpayers. The government should work toward improving the network as its top priority is to reduce the burden of taxpayers.

GST Mismatch Problem

Like any other tax, GST has its gst tax rate list for different tax slabs on different items. The time given to clear the mismatch of the input credit should be at least 3 to 6 months.

If there is a delay on the seller end, the tax should not be collected from the seller again. The dealer should be given enough time to compel the seller to file the return and clear the mismatch of ITC.

Reverse Charge Mechanism ( RCM)

The RCM provision associated with unregistered dealers is impractical as it has zero revenue effect in most of the cases. The reverse charge mechanism has no financial effect on revenue. In most of the cases, the dealer has paid their full tax as tax liability, so RCM becomes just an unnecessary technical formality.

Service Sector Threshold Limit

GST was introduced as ‘one nation one tax’ with the threshold limit of 20 lakh for both goods and service providers. When this threshold limit was enhanced, later on, it was only for goods, not services. Small service providers were not given any benefits which contradict the ‘one nation one tax’ ideology.

Too Many Notices To The Taxpayers

There is an increase in the number of notices issued by the GST council to the taxpayers. It increases the burden and creates complications for innocent dealers and business owners. The primary objective of GST was to simplify the process of taxation, not complicate it.

Conclusion

These are some of the GST problems that need to be solved at the earliest by the GST council. The goods and service tax needs a lot of reforms to reach its potential, and the focus should be on feedbacks and taking necessary steps.