GST @ SEVEN YEARS IN INDIA

[Dr. Sanjiv Agarwal]

The Goods & Services Tax a seven year old tax regime in India. The GST tax regime appears to have more or less stabilised, which is evident from the steady increase in its collections over the seven-year journey. Average monthly GST collection rose from Rs. 90,000 crore during the first year of its implementation 2017-18 to 1.68 trillion during 2023-24, representing 87 per cent rise. Along with expanding the scope of GST to petroleum, particularly petrol and diesel, reducing the tax slabs and reducing the tax rates are important pending reforms of this indirect tax regime. There is a clear call from businesses for the next phase of GST reforms – GST 2.0. The GST is still a work in progress as the law and procedures are still evolving and getting refined and fine tuned.

The 53rd GST Council meeting, first after election and first in 2024 was held on 22 June, 2024 at New Delhi. Since the meeting was held after a gap of more than eight months, there were a lot of issues deliberated and decided, more so in view of the forthcoming Union Budget in July, 2024 in which legislative changes will be effected. The 53rd GST Council meeting chaired by Finance Minister aims to ease the compliances for taxpayers by making provisions and procedures simpler and less cumbersome.

Post 53^rd GST Council meeting held on 22.06.2024, CBIC has issued 16 Circulars bearing Nos. 207 to 222, all dated 26.06.2024, clarifying taxability, place of supply, time of supply etc on various issues. These have been summarized inside in ‘GST Update’ column.

The age old criminal laws in India have now migrated to new laws w.e.f. today, 1^st July, 2024. The three new laws viz, Bharatiya Nyaya Sanhita (BNS), Bharatiya Nagarik Suraksha Sanhita (BNSS) and Bharatiya Sakshya Adhiniyam (BSA) come into force w.e.f. 01.07.2024, replacing the British period laws - Indian Penal Code (IPC), Code of Criminal Procedure (CrPC) and Indian Evidence Act. The BNS has 358 sections (IPC had 511) though 21 new crimes have been identified. These laws are expected to simplify the law as well as ease the implementation. GST law heavily depends on these legislations, particularly in provisions relating to criminal offences, prosecution, search, arrest etc.

GST collection in India has grown in June, 2024 too but at a slower pace, growth being in single digit only on YoY basis (7.7%). Collection growth was 12.4% and 10% in April, 2024 and May, 2024 respectively. While the MoF has decided to discontinue with official release of monthly GST collection, as per media reports, for the reasons not known, the MoF has been releasing the GST data on first of every month since last seven years (74 months) and such a decision coincides with 7^th anniversary of GST in India. The gross GST collection for June, 2024 is reported to be Rs. 1.74 lakh crore. The GST taxpayer base has increased to 1.46 crore in April, 2024 against 1.05 crore in April, 2018.

Indirect Taxation in India

Then	Now
Multiple taxation – levies and cesses	GST – one nation, one tax
Cascading of taxes	Seamless input tax credit for all taxes
Fragmented VAT principles	Holistic application under GST
Regional imbalances	Equitable distribution of revenue
Barrier to inter-state trade	Seamless flow of goods
No e-way bills	E-way bills
Less revenue collection	More revenue collection

7 Gains

• Integration of indirect taxes
• Online compliances
• Tax cascading reduced substantially
• Reduced physical interface with tax department
• Increased transparency in tax implementations
• Reduced transaction costs and unnecessary wastages
• Reduced corruption

7 Pains

• Distorted input tax credit
• Too much and too frequent compliances
• Old mindset of officers
• Lack of trust between tax collectors and tax payers, important pillars of economy
• No appellate tribunal yet
• Multiple tax slabs
• Lack of coordination between various limbs of GST Administration

7 Challenges

• Interpretational issues
• Increased litigation and setting up independent appellate forum
• Alternative for compensation to states
• Fake invoices menace  and rampant tax evasion
• Corruption
• Divergent advance rulings
• Levy of GST on petroleum products / electricity

7 Opportunities

• Further comprehensive tax reforms
• Integration of economy and contribution to GDP
• Ease of doing business
• Buoyant tax collection
• Transparent, accountable and fair & just tax administration
• Expansion of tax base
• Increased direct & indirect employment

7 Suggestions

• Change in attitude, mindset to be more taxpayer friendly
• Practical approach to handle taxpayers / non-compliances
• Make input tax credit smooth and seamless
• Offer fair tax grievance redressal mechanism
• Faster and unbiased adjudication
• Reduction in number of tax slabs / rates
• Prioritize reforms in GST rates and procedures

Notifications and Circulars issued in 2023 / 2024                (Till 30.06.2024)

Particulars	2023	2024
Central Tax	56	11
Central Tax (Rate)	20	1
Integrated Tax	5	-
Integrated Tax (Rate)	23	1
Union Territory	-	-
Union Territory (Rate)	20	1
Compensation Cess	1	-
Compensation Cess (Rate)	3	-
Circulars	18 (189 to 206)	16 (207 to 222)

7 most litigated issues in GST in last seven years

• Fake invoices / frauds
• Detention and seizure of goods and conveyances
• Mis-match in GSTR-3B and GSTR-2A (Input tax credit)
• Investigation and search
• Arrests and Bail
• Transitional credit issues
• Cancellation & restoration of registration