GST council gives relief, but more needs to be done for ‘Make in India’ to happen

Driving change is important. But managing change is even more important. In a nation where politicians and bureaucrats always believed that they know the best, it is welcome to find quick changes and not policy paralysis when things go wrong. The proactive approach of the GST council to decision making and was witnessed as some sweeping changes were made last week to the GSTR Act.
Mistakes and course corrections are bound to happen when you implement far reaching measures and integrate multiple taxes into one. However high on the agenda must be the big picture and the goal of making ‘ Make In India’ successful .
High GST on ‘Make in India’ essentials need rationalisation
The GST council reduced tax rates for several items. However, it missed 3 big ticket items, steel, cement and cables. For ‘Make in India to happen’ it is however necessary to ensure that essential goods needed for manufacturing have a moderate GST. Steel, cables and cement the three inputs largely needed by the manufacturing industry and two of them have been put in the highest tax slab.
It is true that the composite tax on the cement industry in some states was around 30 per cent. But in several other states the total tax was around 24 per cent. The industry is unhappy that GST has been levied at 28 per cent when cement is not really a luxury item. With good demand off take in western and southern India a sharp rise in prices of cement was witnessed this month. Prices went up by Rs. 12 per bag on an average in the second quarter of this fiscal.
The case for reduction of GST on electric cables is even more compelling. The Rs. 8000 crore industry of cables and wires is passing through tough times because of local competition and imports from China. Earlier the tax rate inclusive of excise and VAT was around 18%. This has been hiked and the GST for cables is now 28 per cent. This is affecting all input prices of all manufacturing goods. Cables and wires are no luxury goods but somehow finds itself in the highest bracket of taxes. A quick rationalisation of these rates will help ‘Make in India’.
Reducing multiplicity of taxpayer slabs is needed
The composition scheme has been raised to taxpayers having turnover of 1 crore while the small and medium businesses with annual aggregate turnover of up to Rs. 1.5 crore have been permitted quarterly returns. It would have helped greatly in simplification if a single slab of Rs. 1.5 crore was the median for both the composition scheme as well as quarterly returns with no concessions for special categories.
The difference in tax collection would be pittance but the ease of business would be enormous if a clear demarcation of the segments dividing big business and the SME sector was uniform. One set of rules for big business over Rs. 1.5 crore and another set of rules for SME’s and traders and service providers with turnover below Rs. 1.5 crore. A third set of rules for the tiny and cottage sector with below Rs. 15 lakh turnover.
The multiplicity of GSTR forms needs to be reduced
The number of GSTR forms and returns to be filled is extremely high? The GST council must review if so many forms really required? What are the real compliance issues and how to achieve it with minimum data input needs to be seen. Not many years ago, a very complicated Income Tax Return form was simplified, for ease of business. The experiment was welcomed and did not cause any noticeable loss of revenue.
In the next few weeks businessman will be pounded with a slew of forms with last dates.
The last date of filing final sales return for July in GSTR -1 form is October 10. The last date of uploading purchase returns in GSTR-2 is October 31. The last date for filing GSTR-3 matching GSTR 1 and GSTR 2 is November 10. The last date of filing the return in GSTR 4 by a taxpayer in the composition scheme is November 15 and the last date of filing GSTR 6 by an input service distributor is November 15.
There are in all 27 returns that are needed to be filed under GSTR by all categories of tax payers. This needs to be rationalised. Besides the GSTR 2 filing date needs to be postponed till the issues of invoicing and several other critical technical issues are not sorted out by Infosys/GSTN. The company has addressed less than third of the 45 identified problems given to it by the GST council and may need a few weeks more to sort out the issue. The GSTR-2 and GSTR -3 regimes need to kick in only after the problems are sorted out by the software developer.

(The author of this article is Sandip Sen)
Source :  The Indian Express


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