- Date : 11/07/2022
- Read: 3 mins
GST stands for goods and services tax. It is one of the major tax reforms that is undertaken in the country. GST has assisted in better administration of taxes and attained better uniformity in tax rates across all the states.
Goods and services tax:
GST is an abbreviation for goods and services tax. It was introduced in India with multiple long-term goals such as elimination of hidden taxes, easiness of doing business and attaining improved revenue buoyancy. The revenue buoyancy could be seen in rising monthly collections of GST i.e. 1.4 trillion rupees in June 2022. Since March 2022, the tax collection is on the rising every month. Introducing GST was not an easy task for the government, they had to convince the state governments that it would lose out on ways of revenue generation.
Watch this video to know more about GST:
Benefits of GST
- Digitalization in compliance: The government automated the tax compliances was an enormous win and worked proficiently, particularly when compared with the former government. It was made possible because the ‘One-stop-shop’ portal also known as GSTN was introduced for all agreements under GST.
- Technology tools were used: The main focus of the primary phase was constructing the main functionalities that the taxpayers and officers required. After this, the next thing was influencing available data and technology for the improvement of compliance, identifying frauds, and providing support to policymaking
- Working of GST council: The keystone of the GST regime, the GST council which is true evidence of the fiscal federal as well as a structure based on consensus.
Improvements required in GST
- Requirement of unlocking credit: The main purpose of implementing GST was to make sure continuous tax credits were without any losses through the complete value chain. However, forwarding the credit restrictions from the previous regime adds to the cost of businesses thereby blocking working capital for companies.
- Expanding the tax network of GST: Petroleum is not included in GST and a big part of the economy is still not included in the tax network. If petroleum products are included under GST, the cost of companies as taxes would be reduced.
- Use of Blockchain technology: The GST landscape was revolutionized by GSTN, the blockchain technology has vast potential in resolving glitches and improving the efficiency of GSTN. Small businesses in remote locations have unreliable GST networks which is still a challenge.
It’s been 5 years since GST has been introduced into the Indian tax system. It changed the indirect tax system significantly and improved tax administration. The government and the industry have experienced a roller coaster ride in the past 5 years. The GST collections have reached RS. 1.4 trillion in March 2022 and a rise in the collection has been seen every month since then. GST has worked well in many areas but it still needs improvements in some areas.