100 days of GST: Func­tion­ing of Coun­cil re­mark­able

Financial Chronicle - - PLAN, POLICY - (The writ­ers are part­ner and as­so­ciate di­rec­tor- in­di­rect tax, PwC. Views ex­pressed are per­sonal) PRASHANTH AGAR­WAL PART­NER PwC, IN­DIA NANDITA NAWALAKHA ASST. DI­REC­TOR PwC, IN­DIA

GST has been touted as one of the big­gest tax re­forms since In­de­pen­dence in In­dia. The in­dus­try had been want­ing for this re­form to hap­pen for a long time. The man­ner in which the Go Live date was cel­e­brated by the gov­ern­ment as well as in­dus­try was un­prece­dented. This showed how big a change the coun­try was em­bark­ing upon.

There was an ap­pre­hen­sion in terms of whether the in­dus­try was ready on July 1 to em­bark on this new jour­ney. There were mixed opin­ion among dif­fer­ent sec­tors as to whether the gov­ern­ment should have given more time or not.

Sur­pris­ingly, the first month into GST was quite smooth and there did not ap­pear to be any ma­jor chal­lenge that the in­dus­try at large faced. The price of the goods/ ser­vices to the com­mon man re­mained un­changed or re­duced.

The auto sec­tor as ex­pected had passed on the ben­e­fits un­der GST in terms of re­duc­tion in the prices and had a great month in terms of sales. There were a few of the sec­tors (such as tex­tiles), which were fac­ing chal­lenge in terms of in­crease in rate of tax.

One must ap­plaud the ef­forts made by the gov­ern­ment in terms of pro­vid­ing clar­i­fi­ca­tions to var­i­ous is­sues, which the in­dus­try had been fac­ing.

The sec­toral groups were for­mu­lated to un­der­stand the in­dus­try spe­cific is­sues and FAQs were is­sued to help the in­dus­try.

The GST Coun­cil, wher­ever it found merit, ap­proved of changes in the tax rates based on in­dus­try rep­re­sen­ta­tion. The man­ner in which GST Coun­cil has func­tioned is re­mark­able and shows the true colours of democ­racy. All the de­ci­sions till date have been taken with con­sen­sus and there has not been an oc­ca­sion, which re­quired a vote to ar­rive at a de­ci­sion.

The ex­porters (for both goods and ser­vices) were fac­ing chal­lenges in terms of the process to be fol­lowed for ex­port­ing goods/ ser­vices as well as on ac­count of cash flow is­sue con­sid­er­ing the ex­emp­tions (avail­able un­der erst­while regime) had been with­drawn un­der GST. How­ever, re­lief has been pro­posed for the same as well by the GST Coun­cil re­cently.

The big­ger chal­lenge for the in­dus­try and the gov­ern­ment came when the com­pli­ances un­der GST be­gan. It is a new sys­tem for ev­ery­one wherein the whole com­pli­ance un­der­taken across the value chain is in­ter-linked.

Con­sid­er­ing the mam­moth task on hands it was ex­pected that there would be teething is­sues. How­ever, the re­sults were not very en­cour­ag­ing and the in­dus­try had to face a lot of more chal­lenge than ex­pected.

GSTN, which is the nodal body for ad­min­is­trat­ing the GST com­pli­ances, has come un­der a lot of fire in terms of their readi­ness for GST com­pli­ances. To be fair to GSTN, there was limited time that they had to be func­tion­ally ready for a change of this mag­ni­tude.

Also, one would need to un­der­stand that any IT sys­tem of this stature would take time to sta­bilise. It is there­fore im­por­tant to man­age ex­pec­ta­tions and there the role of the gov­ern­ment be­comes ex­tremely im­por­tant.

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