5 YEARS OF GST – AN INDUSTRY PERSPECTIVE

On 1st July 2022 we will be celebrating the 5th birth anniversary of implementation of GST in India. On ‘GST Day’ let us look back and reflect on GST’s achievements and failures and the way forward. In June 2017, the then Finance Minister of India, Late Mr. Arun Jaitley announced implementation of the biggest tax reform after independence. Looking at the scale and diversity of our country, it was a mammoth task. The broad objectives of bringing GST into India can be captured in two quotes -

“One Nation, One Tax” and “Good and Simple Tax”

I. PRE-IMPLEMENTATION

The proposed Indian GST law was unique in many senses. It was dual GST plus IGST for interstate supplies administered by States and Union simultaneously. Therefore, trade and industry were highly apprehensive about its impact on their businesses and doubted the success of the new tax regime.

The main fears were –

1.    Registration in each State: Prior to GST, the service sector was required to comply with the service tax regime which was a Union levy which did not require maintenance of state-wise records and state-wise registration for every state in which one carries on business. It was a herculean task to align business processes to comply with the requirement of state-wise reporting. If not done proactively, it would have business impact of missing input tax credits and the consequences of non-compliance.

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