Is GST beneficial for India?


The latest and the renewed by the Government of India recently has won due accolades for the BJP and Narendra Modi, however, yet there is another black and grim reality to the situation.

It has been five months since the new tax regime was implemented, yet it is a cause of hinderance for various small entrepreneurs who are looking to make a living out of their small-scale businesses. They have been still struggling with the ill-effects that the demonetization brought in the country since its inception in November 2016.

GST is known to be the third largest tax reform since independence. GST aims to replace all mass state and central tax levies, which were often a complaint among various foriegn investors. The single duty tax reform was expected to transform the Indian markets with fuller efficiency levels and less corruption levels.

However, the reality is different. Administration under Modi-led BJP is still unable to lighten the burden on the small and medium businesses and owners. There seem to be various GST related grievances that the SME sector is largely facing.

This is not just the only drawback of the GST regime. The tax regime as a whole is an uneven, unpolished and of a confusing nature. There are no specific guidelines on the basis of which the regime has been implemented. The implementation was of an inferior grade, the rates and the tax percentages were confusing, and moreover, the CA of the country who are known to be tax-masters, most of them were unable to understand the concept in one go!

The picture of the “goody” tax reform by the BJP is not very neat. They do not provide ease and assistance to many industries which are not exactly covered under the new and reformed tax regime. Most industries are still confused over the tax rates and the implementation of the same. The businesses are still overburdened by the demonetization move by the Government last year and are dealing with the complexities it brought into their lives. The addition of GST to these complications was not a very welcome move. The growth of the economy and various industries has been impacted as a result.

The complication arises from the fact that GST through a single indirect tax regime, is not so “single”.

There are separate registration formalities and separate returns that need to be filled out for various states where a single business is established. Apart from these issues, the number of filings have increased by 24.

For most industries, the tax rates are higher than before. Taxes for example, in the clothing and retail businesses have increased from 7 percent earlier to 12 percent now. Business owners who are late in filing their returns will now have to add 200 INR as a daily penalty charge.

The GST tax regime is criticised by various people across the nation for being too “friendly” with the registered and established companies and business. In comparison to the earlier times when businesses and vendors could work with each other at low costs are now facing high costs in business dealings, which has lead to a rise in costs overall. The small vendors and business owners who are not registered are feeling “disassociated” suddenly.

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