GST: Mirage or Miracle?
It’s already been a month since the implementation of the biggest indirect tax reform since independence- Goods and Services tax. Still, we are not how much tax do we have to pay for which product. There are a lot of discussions about the long run benefits of the tax reform but our research shows that the common men are facing some difficulties adapting with the new regime. Some of the complexities in the structure are making it difficult to understand not only for common man but also for small traders and manufacturers.
One of the major problems that people are facing is the confusing tax slabs. Unlike the model GST structure, Indian GST structure has multiple tax slabs. Moreover, the system is so complex that you have different tax slabs for similar kind of services or goods. For example, if you having dinner with your family in a non- air conditioned restaurant then you have to pay GST @12% but if you are having it in an air conditioned restaurant then you have to pay it @18%. Also, if the restaurant has both the sections then the customers might end up paying two different tax rates for visiting the same restaurant and having the same food.
Even if a consumer gets to know the tax rate on the item that he is supposed to purchase, he/she gets confused on another technicality i.e. the bifurcation of GST into CGST, SGST, and IGST. Apart from these, the biggest concern that they are facing is the increased tax rate on services. Earlier, the service tax of 15% was being levied on any type of service. Now, it has been increased to 18%. As a result, buying insurance, telephone bills, credit card debt repayment, etc becomes expensive and people have to readjust their monthly budget accordingly.
For small traders and businessmen the new system is proving to be more cumbersome than it was supposed to be as each financial year they have to file at least 37 returns and if they have any interstate business then the number goes up drastically.
The idea of ‘One nation, one tax’ may seem to be a miracle because of all the challenges it faced in the process of being implemented as well as the promises it makes for the future but years of negotiations with political parties, state governments and industries have diluted and complicated the proposed system. As a result, this assumed miracle may even turn into a mirage.