In a major initiative to ease the tax system of the country, the government of India launched GST on July 1, 2017, the country’s biggest indirect tax reform since the economy opened up 25 years ago. July 1, 2018 marks one year of the launch of GST in India. The policy aims to contour the taxation structure within the country by doing away with numerous taxes imposed by states and Centre and introducing a unified legal system. GST is currently referred to as the foremost transformative tax reform in India ever. One Nation, One Tax and One Market because of GST has led to economic growth, simplicity for individuals and transparency within the economy.
The country’s business landscape saw a widespread makeover with the introduction of the ‘one nation one tax’ regime. It increased the ease of doing business in the country. GST enables common procedures for registration, duty payment, return filing and refund of taxes. It also enhanced the export competitiveness due to effective neutralization of taxes. More than Rs. 45,000 crore of GST refunds is disposed off in this one year. GST has also led to abolition of toll collection at state borders, saving significant time for trucks. This has resulted in tremendous gains for the logistic sector.
GST has also benefited small and medium enterprises with a turnover below Rs 20 lakh as these are exempted from GST. This move has brought down the tax and compliance burden on many small and medium businesses. GST also provided a simplified Composition Scheme wherein it provided for concessional rates for taxpayers with annual turnover upto Rs. 1 crore. Entities with turnover upto Rs. 1.5 crore were to file return in GSTR-1 only on quarterly basis. Also, there was GST imposed on advance supply of goods.
In the pre-GST era, it had been usually seen that some industries in India like construction and textile were for the most part unregulated and unorganized. Under GST, there are provisions for online compliances and payments, and for availing of input credit only when the supplier has accepted the amount. This has brought in answerability and regulation to those industries.
As per Prime Minister Narendra Modi, GST increased competition among manufacturers, which helped bring down the prices, making consumers the biggest beneficiaries of the new tax regime. With GST, there is no more cascading effect of various central and state taxes and thus, the effective tax rate on goods is much lower. Also, large number of items of daily usage are either exempt or in 5% slab and 95% of items fall in or below 18% slab.
The entire process of GST (from registration to filing returns) was made online, and it is super simple. This has been useful for start-ups particularly, as they no more have to run from pillar to post to urge totally different registrations like VAT, excise, and service tax. One may also generate an E-Way bill that ensures easy movement across the country. During this past one year, 48 lakh of enterprises were added in GST and 66 lakh of enterprises registered from independence until now. Over 10 crore E-way bills are generated and over 11 crore returns are filed.
Prime Minister Narendra Modi rightly said, “GST has brought growth, simplicity and transparency ,i.e. Boosting formalisation, Enhancing productivity, Furthering ‘Ease of Doing Business’, Benefitting small and medium enterprises.” GST has truly bought a positive change in the lives of Indian and the Indian economy.