DNA Edit: GST turns One – Corporate sector biggest beneficiaries of tax reform

The one-year anniversary of the Good and Services Tax (GST), which was launched on July 1, 2017, is a good time to look at what has been achieved and what more needs to be done. The big positive is that a first step has been made to introduce clarity and uniformity in the taxation system. Before GST, it was safe to say that the Indian taxation system was a maze. The indirect tax regime meant that taxes were often levied upon taxes.  

There was excise duty which taxed production, there was VAT or sales tax, there was central sales tax on interstate sales, to name but a few examples. Through GST, the cost of production has been driven down as no longer do manufacturers and retailers have to contend with multiple taxes. It also brings transparency into the system which in turn creates a business-friendly environment. This goes hand in hand with the Prime Minister’s ‘Make in India’ scheme and encourages foreign investment.  This calls for celebration. There are things that the government must still work on. The slabs on multiple tax rates are creating confusion and the requirement to file multiple returns are irritants in the system. Another issue the government needs to look at more closely is the timely refunding of duties.

Finally, technical glitches in the GST portal, has meant that exporters have been unable to file for refunds for input tax credits in June. The government had organised a special refund fortnight drive in June to clear pending applications for GST refunds but this is an issue that needs to be looked into more closely. Despite these teething problems, GST was a reform long sought after by the corporate sector. Though some may have not felt the benefits of this new taxation system yet the Indian economy will benefit from it in the long term.