4 years of the Goods and Services Tax (GST) regime completed

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4 years of the Goods and Services Tax (GST) regime completed

4 years of the Goods and Services Tax (GST) regime completed

Recently, on July 1, 2021, four years of the Goods and Services Tax (GST) system have been completed.

  • It is to be noted that GST, introduced on 1st July 2017 has integrated India into a single and common market by converting various indirect taxes into a simple, transparent and technology-driven tax regime.
  • It has subsumed almost all domestic indirect taxes (petroleum, alcoholic beverages and stamp duty being the major exceptions) under one head tax.

Achievements of Goods and Services Tax (GST)

  • Simplified return filing system has led to an increase in revenue collection and business registration.
  • E-way bill along with removal of multiple checkpoints has resulted in ease of transportation, saving in logistic cost etc.
  • E-invoicing system has been introduced to check fraudulent invoicing by simple calculation of tax liability and matching of Input Tax Credit (ITC).
  • The economy has been formalized on a large scale.

Challenges

  • The 15th Finance Commission report has highlighted concerns like multiplicity of tax rates, lower than forecast in GST collections, inconsistency in filing returns, etc.
  • The Center’s increasing dependence on cess and special surcharges, which are not part of the divisible pool of taxes.
  • GST reimbursement to states became controversial when GST collections declined due to the pandemic.
  • Technical glitches, difficulty in claiming input tax credit etc.

Goods and Services Tax

  • The Goods and Services Tax came into effect from July 1, In this, GST cooperative federalism is controlled by governments, including both central and state level surcharges.
  • A new clause (12A) has been inserted in Article 366 under the 101st Constitutional Amendment Act, 2016, according to which, ‘Goods and Services Tax’ means a tax on the supply of goods or services or both, excluding the tax on the supply of alcoholic beverages intended for human consumption.

Nature of Goods and Services Tax:

  • Central Goods and Services Tax (CGST) is a tax levied by the central government on transactions that take place within a state. It is deposited in the account of the Central Government.
  • The taxes levied by the states are called ‘State Goods and Services Tax’ (SGST). This tax is deposited in the account of the state government.
  • Similarly, the Union Territory Goods and Services Tax (UTGST), for Union Territories.
  • Similarly, there is a provision to levy and administer Integrated GST (IGST) by the Center on each inter-state supply of goods and services.

GST Council:

It is the governing body of GST. It is chaired by the Union Finance Minister and includes the Finance Ministers of all the states.

Guaranteed Reimbursement:

The GST Act guarantees a 14 per cent annual increase in the tax revenue of the states for five years (up to the year 2022) from the amount collected by the states in the financial year 2015-16.

Source: PIB

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