The Goods and Services Tax Act implemented in India turned out to be the most complex taxation system. Moreover, a report by World Bank stated that the nature of GST applicable in India is the most perplexed amongst all the nations that comply with GST. You must be aware of the fact that the GST system in India levies taxes on goods and services under five different tax categories. This unique feature of the taxation regime has made the system most complicated. However, the government has decided to make few substantial changes in the regime for its simplification. But can the government hold the entire burden of taxation itself?
The most important thing to notice in the Goods and Services Tax Act is that the taxation system is completely digital. Hence, the government alone can’t make the paradigm shift in GST. The GST Council requires an abundance of technology aces to make the game of taxation fair for the Indian taxpayers. The advent of technology in the field of Indian taxation system has not only brought an ease for the taxpayers to comply with the regime but also transformed the regime into an understandable one.
But even after the technology has managed to wipe out the GST compliance-related problems, you might still be suffering from the issues of refunds, returns, etc. Fortunately, the GST software has a potential to resolve most of the taxation-related issues. Here’s how:
1. Anti-profiteering measures- In India, there are many fraudulent businesses that have been manipulating with the customer’s benefits under GST. The government provides the manufacturers with the benefit of claiming the tax paid on inputs. Consequently, the manufacturers must provide the same benefit to the consumers. But the customers, instead of getting the goods and services at a lower cost, were being tricked to pay hiked prices. Since the implementation of the Goods and Services Tax Act, the manufacturers have been blaming the government and new taxation regime for the increase in prices. As a result of which, the government has decided to launch an anti-profiteering body to keep an eye on such deceitful activities. And since the operation is big, the GST software would play a significant role in the achievement of the objective.
2. Unconsidered transactions- The act of the government levying a tax on each transaction in your business might seem like a hanging sword. But the truth differs. Besides the stock transfers between the branches of a single organization, there are various other transactions that could be considered as a fraud in numerous ways. If these transactions are not considered under the business’s name then the government would neither have:
- The record of the transactions made amongst the employees.
- Nor the government would be able to levy a tax on it that will ultimately affect the revenue collections.
These dishonest acts also create an impact on GST exemption for small business. Hence, the lawmakers have decided to shut the businesses until the tax payment if found guilty of such measures.
3. Neutral cash flow- Initially, a single concept of GST’s nature have been followed amongst the nations that have applied it in their systems. But as of now in India, there are three tax components under the Goods and Services Tax Act being CGST, SGST, and IGST respectively.
CGST- Central Goods and Services Tax.
SGST- State Goods and Services Tax.
IGST- Integrated Goods and Services Tax.
And since there are three major gateways for the taxpayer to pay tax, the assistance of GST software is highly required. Otherwise, you will get tired waiting for the refunds if you paid the tax under the wrong head (for example, the tax applicable under SGST paid but paid under CGST). This extra burden of the taxation arose due to the multiplicity of the taxation components could easily be removed with the help of technology. Moreover, the government’s viewpoint on this issue is persuasive, but the idea to put an unnecessary load on the taxpayers is not.
Due to some substantial reasons, the Goods and Services Tax Act haven’t been able to evolve completely even after nine months of the regime’s roll-out. But some of these reasons hindering the growth of the revenues under GST are naïve and senseless. That’s why the government must try to target the slothful components of the regime and either modify them or eliminate them altogether. Then only the taxpayers of the nation, as well as the government, would be able to take a sigh of relief. The simplification of the processes like return filing mechanism, e-way billing system, and multiple tax categories would effectively make the regime a lot simpler and would also help generate more revenue collections.