Goods and Services Tax (GST) and demonetisation was one of the most daring and controversial steps taken by the Modi government within a span of 12 months in 2016-17.
GST was implemented on July 1, 2017, just eight months after the shock of demonetisation which was painfully slow in ebbing away. Initially, as expected, GST threw everyone in panic from the neighbourhood kiranawala to multinationals in their plush offices. There were numerous compliance requirements, tons of paperwork, upgrading of tax software, increase in tax rates and a very slow online portal to cope with.
But after hundreds of meetings, numerous reforms, revisions and changes, where do we stand after more than 2 years of GST implementation? Time to do a quick recap of things and get a heads-up on what to expect next in GST reforms.
But firstly, let’s understand what GST is and why it was created.
Before the implementation of GST, there were several types of indirect taxes in India. To avoid the confusion and inefficiency in the taxation system due to a number of indirect taxes, the government decided to sign the Goods & Services Tax (GST) into law. GST is a single indirect tax regime for the entire country.
GST is an indirect tax system that levies taxes on a product or service at every point of sale in the supply chain until the finish products reaches the hands of the consumer. For instance, GST is levied during the following points of sale, such as:
Apart from grappling with the compliance requirements of GST, businesses today are facing a serious credit crunch due to lack of business loans. A series of high profile loan frauds, defaults and bankruptcies have put banks on the back foot and they are very reluctant in disbursing business loans.
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After the initial hiccups, things have significantly fallen back on track with regards to GST but there are several unfinished agendas and reforms needed to simplify compliance and rationalise tax rates.
Here is a brief snapshot on what are the likely rounds of reforms expected in GST in 2020 and beyond:
On September 20, 2019, the GST council headed by Finance Minister, Nirmala Sitharaman, convened a meeting even as there was an outcry among businesses houses for tax rate cuts to counter the economic slowdown. The outcome of the meeting was a slew of rate cuts and even abolishing of GST for jewellery exports. Below are the highlights.
On a positive note, the new GST reforms and simplification of returns and more transparency in the system may be game changing for the nation’s economy in the long term. However, given the bad business sentiment in the country, it’s tough to persuade businesses to wait out this transition period, which has extended longer than expected.
To tackle the downturn, the government and RBI should pull out all the stops to make credit more readily available for micro, small and medium enterprises (MSMEs) since they are the backbone of the economy. If you are a small or medium sized business looking for hassle-free and fast business loans up to Rs. 30 lakh, consider taking a Bajaj Finserv Business Loan available on Finserv MARKETS. Finance your business with attractive business loan interest rates and flexible repayment tenures, ranging from 12-60 months. Also, get access to your Financial Fitness Report and protect your business loan liability with customized insurance plans. Read more about components of GST only at Finserv MARKETS
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