GST Implementation: The Indian Experience

Goods and Services Tax (GST) marked its beginning on the midnight of July 1, 2017, with the sound of gong in the historic Central Hall of Parliament House, reminiscent of India’s tryst with destiny on the midnight of August 15, 1947, releasing Indian Economy from the web of multiple indirect taxes and bringing in the largest tax reform since independence.

The implementation of GST on completion of its first year seems to be largely effective and efficient from the standpoint of various stakeholders, (i) consumers, for whom GST unlike international experience, it has not shown any initial inflationary trend in India, (ii) for industry, the subsuming of multiple central and state levies into one GST along with seamless input-tax credit has been a boon and (iii) for Government, GST regime has resulted in significant increase in the tax base and tax collections thereof. Besides, the highs the GST bag contains some lows also viz. (i) business were saddled with compliance burden which was in stark contrast to ‘ease of doing business’ being propagated by the Government (ii) The number of amendments and tweaking in law by way of circulars, notifications, press release, clarifications, orders etc. have added to the complexity of GST Law (iii) carrying forward of legacy of interpretation and classification disputes which is further worsened by contrary advance rulings pronounced by Authority for Advance Rulings of various states.

In its present avatar GST is only a Good but not a Simple Tax. If the Government actually wants to make it into a Good and Simple Tax then it should look at making the law simpler in terms of the compliance burden and start trusting the tax payers.

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