India’s domestic trade is approximately USD 1.7 t (or 60% of its GDP). Its international trade (imports and exports) at current terms is about USD 1 t. Globally, the countries with higher international trade percentage offer better quality of life for their citizens. In India too, the states which have a higher percentage of international trade (and hence, more assimilated globally) offer more prosperity to its citizens. Also please note that in more developed countries, SMEs lead the international trade and not the large corporates. One thing which was decisively coming in the way of our country’s international trade was a huge range of taxes and cesses and supertaxes etc. We were not globally assimilated and our indirect tax system was very complex, manual, people and not process oriented. This gave ample room for tax theft, non compliance, corruption and witch hunting. Its tax regime did no justice to a large economy like ours (globally, now the 3^rd largest on Purchasing Power Parity basis and the 6^th largest on the Nominal Economy basis). We were punching below our weight and were not even competing with the South East Asia. While the world expected us to punch above our weight to counter China. The situation had to be corrected. India needed to be at par with advanced economies.

There was need of a proper, fair, transparent and uniform tax structure for interstate sale of goods and services.

There are very few incidents in the modern history of our country’s economics which have left an impression as constructive as the indirect tax reform, simply known as GST (Goods and Services Tax). GST was launched on 1/1/17 and has completed one full year of operations. GST is administered by a committee of members picked from the legislative and the administrative fields named GST Council. It was not possible to have just one Tax Slab like it is in Singapore (all goods and services there are taxed at a flat rate of 7%). But Singapore is a city nation with just 4 m population.

Implementation of GST platform is provided by Infosys which won Rs.1380 cr deal to complete the project.

GST Network (GSTN): is a common, shared Information Technology platform which provides all the services related to guidance, handholding, tax input, tax refund, tax credit and concessions to the tax payer. It is on line and real time and hosts all the forms and form filling procedures. It is meant to provide end to end services such as Registration, Tax Payment, Return Filing and Refund services. A GST Taxpayer need not look elsewhere for any of its needs.

GSTN also works as an interface between the taxpayer and the governments (Central as well as State). HDFC, HDFC Bank and ICICI Bank hold 10% equity each in GSTN. It has its HO at Aerocity, New Delhi. We highly recommend visiting the GSTN portal at www.gstn.org. All tax challans have to be put at this GST portal only. There will be common returns for CGST (central government), SGST (state) and IGST (inter state movement of goods).

It has purposes such as

• One Nation, One Tax means uniformity of tax on a particular object across the nation
• For e-commerce The GST is Tax Collected at Source (TCS) which is 1% right now
• Abolishing Excise Duty, State Sales Taxes, Central Sales Taxes, Service Tax, Countervailing Duty, Value added Tax, Octroi, Purchase Tax
• Simplifying and unifying multiple Tax Slabs levied on an object by central / state governments
• Uniformity on taxes on the same object
• Uniform practise and laws to deal with the paperwork, incentives and penalties

A few Features of GST are as follows:

• Several essential commodities, petrol and diesel, alcohol, real estate is kept outside of GST
• Multiple Slab System. It is a 4 tier tax rate structure: 5, 12, 18 and 28 percent
• There is a category of some essential commodities with zero tax such as clothing
• Gold attracts GST of 3%
• Essential items of daily use attracting lower rate
• Luxury and Demerit goods attracting higher rate
• Sin goods such as tobacco and luxury cars attracting additional cess

Positives which came out of the GST implementation

• 50% increase in the number of indirect taxpayers
• First time, the nation saw voluntary registrations, mainly by SMEs for availing input tax credit as they buy from large corporates
• Equilibrium in the country’s distribution ecosystem
• Input Tax Credit has brought greater transparency and ease of doing business
• Price for consumers has dropped
• Monthly tax collection has crossed Rs. 1 lac crore in a few months and is expected to stabilise at a minimum of Rs. 1 lac crore in the coming months.

After its launch a year back, many changes in GST rules have taken place. They were meant to take place in such a massive exercise which touches 130 cr people. The latest round of changes has come as late as 21^st of July itself. In the meantime,

• On 21^st July, 18, GST was removed from sanitary napkins. White goods such as refrigerators, washing machines, TVs and juicer mixers were brought down from 28 to 18% slabs.
• Launch of e-way bill on 1/4/18
• In January 2018, cut down taxes on 29 goods and 54 services
• November 2017, shifted 178 items from 28% slab to various lower slabs
• Put non star category restaurants to 5% slab making outside food much cheaper

The challenge is to bring the left out categories under GST.

• Multiple tax slabs. Some items still not rationalised
• Petroleum and real estate must be brought in
• Unpreparedness / underpreparedness by the unorganised sector
• Delay in refund claims
• Delay in exporters’ claims
• Training and troubleshooting for actual users