LESSONS LEARNT FROM OTHER COUNTRIES AFTER IMPLEMENTATION OF GST

Introduction

One, though GST's slogan was  “one nation, one industry, one taxation s”, we have turned out with `` one nation, one industry, five taxation rates ''. All different countries that have implemented GST have taken the limit of two tax rates. But after implementation of GST in India would be the first country that can take five taxes — zero, 5 per cent, 12 per cent, 18%, and 28%. Multiple taxes can cause confusion and increase costs of cooperation for corporations, negating the great benefit of the GST.

In simple terms, GST could also be defined as a tax on goods and services, which is liveable at each point of sale or provision of service, during which at the time of sale of products or providing the services the vendor or service provider may claim the input credit of tax which he has paid while purchasing the products or procuring the service. it's basically a tax on final consumption. During a GST implementation  regime it's anticipated that the assets are going to become prehensive, as virtually all goods and services are going to be taxable, with minimum exemptions. GST implementation  are going to be a game changing reform for Indian economy by developing a standard Indian market and reducing the cascading effect of tax on the value of products and services.

Post GST inflation

The inflation shot up from 4.3 per cent in 2005 to six .4 per cent in 2007. The industry didn't expire the advantages to customers immediately. A report released by Comptroller and Auditor General of India within the year of 2010 said that an advantage of ₹40 crores, which should are passed on to the consumers after the implementation of VAT, was cornered by the manufacturers and therefore the dealers.

The non-inflationary impact of GST is sort of evidence because the inflation rates in other countries that have implemented GST like Canada, Singapore, and Australia, started moving down after its implementation. New Zealand, which introduced GST on October 1, 1986, witnessed a spike in inflation from 13.22 to 15.74 per cent in 1987 but it moved down thereafter to around 5.72 per cent by 1989.

Implementation

Implementation of GST will result in better compliance as everyone within the value chain who gets input decrease has an incentive to make sure that the previous person has paid tax. the opposite benefit is that the differentiation between goods and services is removed, and decrease is out there across this distinction. Having a consistent tax across India with input credit is additionally likely to get rid of the tax bottlenecks in transactions that span two or more states. this can help India evolve from a fragmented market structure to one national market.

Although the GST will remove the various shortcomings of the present legal system. However, for the successful implementation of an equivalent, we must take care of a few aspects. Following are a number of the factors that has got to be kept in mind about GST: State governments have trade lobbies within the transportation and retail industry which claim that a monopolistic situation is often created with GST since it favours supply chain efficiencies for those with deep pockets. State governments believe GST will reduce revenues. The Central government and therefore the Opposition have locked horns over what should and will not be a part of GST. Otherwise, it'll be really cumbersome for businesses to suits the provisions of the law. For smooth functioning, it's important that the GST clearly sets out the taxable event. However, this new GST move would have an equivalent drawback of the existing legal system because parliament would have the power to form laws that override any law made by state legislatures. The GST may be a destination-based tax, not the original one. In such circumstances, it should be clearly identifiable on where the products are going. This shall be difficult just in case of services because it's tough to spot where a service is provided, thus this could be properly addressed. More awareness about GST and its advantages need to be made, and professionals like us really need to take the onus to assume this responsibility.

SMEs and large organizations came at per

A sizeable portion of SMEs is of the opinion that GST isn't all good for the world and their fears might not be totally vacuous. The tax neutrality that the SMEs enjoy could also be one among the prominent benefits. However, reduction in duty threshold is one among the key concerns that have led them to be wary of the GST bill. Under the prevailing excise, no duty is paid by a manufacturer having a turnover of but rupees 1.50 crores. But, post GST implementation, the exemption limit will get significantly lowered. During a speech at a press conference, minister of finance, Arun Jaitley estimate said, the limit is often as low as rupees 25 lakh. As a result, an outsized number of SMEs and start-ups are going to be mandated to return under the tax net and can need to pay an outsized chunk of their earnings towards tax. Furthermore, there are other flipsides to the proposed tax neutrality. GST regime won’t differentiate between luxury goods and normal goods; this may it hard for the SMEs to compete against large enterprises. GST that's ultimately levied on supply won't be available for input credit. this may cause a rise within the cost of the products for businesses that provide on to end-users.