The historic GST is struggling to stay in step with needs and expectations. The ink was barely dry on the first draft, when it saw at least 11 amendments, and rates revisions of nearly 100 items. The decade-old effort towards ‘one nation, one tax’ was to unify the tax system, but the grim reality is, it repulsed companies, the worst-hit being SMEs, blew out growth prospects and failed to juice the economy. The Ministry of Finance, which celebrated GST’s successful rollout, is now sweating the gory details undertaking several markups and revisions to smooth out its kinks.
The good news is, the GST Council is pushing for a quick and painless debate on the way forward. With inefficiencies tumbling out by the day, the Council is moving swiftly to keep the chatter low and work with a single-minded intent to prune its structure. As we speak, the Council is considering lowering taxes on more products under the 28 per cent slab.
The changeover comes at a critical moment, but forces within the government seem unhappy with former revenue secretary Hasmukh Adhia calling for a complete overhaul to ensure the SMEs and common man aren’t burdened. Officials are also hinting at bringing real estate, petroleum products and electricity under the GST ambit.
Given that India has a large MSME base, there’s an urgent need to standardise and simplify processes. This could make the learning curve stretch longer, but is unavoidable. While GST brought 27 lakh new registered entities into the tax net, just half file returns. Relaxation from monthly to quarterly filings for SMEs is welcome, issues involving invoices, delivery challans, and smooth rollout of e-way bill could further improve compliance.
Considering the ongoing changes, it may well take a year for GST to get its final shape. For now, PM Narendra Modi’s biggest reform is bearing down on him, with the Opposition projecting GST as a code for chaos. But there’s no denying that the NDA government’s historic reform will outlast its tenure.