19 Challenges in Successfully Implementing GST in India

Goods and Services Tax (GST) is a comprehensive, multistage, destination-based tax that was launched in India on 1 July 2017 as a value-added tax for the entire country. It is levied by the Center Government, States Government and Union Territories Government. Businesses are responsible for collecting the taxes paid by consumers and sending them to the government along with the payment of taxes. The difference between CGST and SGST is that SGST means it’s collected and owned by all the states simultaneously while CGST means it’s collected and owned by the Centre only simultaneously. The remaining amount of IGST is collected and be paid by all the states simultaneously on an inter-state level.

The goods and services tax is one of the most important indirect tax reforms for our country. Due to the impact of GST on the Indian economy it can be easily seen as one of the most crucial landmark events since independence. It is expected to reduce the cost of doing business and promote the growth of the economy. However, certain issues need to be addressed immediately to ensure its success.

1.      Weak compliance mechanism

The first challenge is to improve the compliance mechanism. The government needs to simplify the tax payment procedures for small and medium businesses by reducing their compliance cost. Constant changes in policies and rules by levying taxes on small businesses should be banned.

2.      Cooperative Federalism

The second issue is related to dual control. States need to give up this power to ensure that businesses do not face too many compliances simultaneously. The third problem concerns ‘anti-profiteering’. The government should simplify this mechanism and focus more on ensuring that prices of goods come down after GST implementation instead of going after taxpayers who may or may not have passed on the benefit to consumers

3.      Complicated process to file returns

The first major problem encountered is with the filing of returns regularly. It was expected that a smooth and easy tax filing process would be designed, but unfortunately, it turned out to be extremely difficult to execute. These issues have also led to a delay in refund of taxes, which should ideally be returned in a few days after filing returns. Also, one major problem that most people face is difficulties with uploading invoices on the GST portal. Besides these emsigner download process or adjusting credit notes according to GST also have a learning curve. If you want to learn about these you can visit Khatabook.

4.      Low threshold limit

The second change that needs to be done for the GST system to run smoothly is the amendment concerning threshold limits. This is because the current threshold limits are too low and only small businesses have been able to register under GST thus far. Most medium or large scale businesses have found it very hard to comply with GST due to its complex structure

5.      Technical problems

Adapting to the new regime, a host of small and medium businesses still grapple with glitches in the GST Network portal. While some are facing problems in the generation of proforma invoices, some others are facing difficulty in getting input tax credit (ITC).