What the article is about:
- The article talks about success of GST( goods and services tax) and suggested reforms in GST 2.0
Relevance:
- GS3: Indian economy and issues related to planning, mobilisation of resources, growth, development and employment.
Analysis:
- The last five years of the GST journey have slowly yielded higher revenues.
Improvements over last five years:
- We have single tax across the country with stable tax rates and a common technology platform called GSTN.
- Transparency has increased in payments of duties and filing of returns.
- The ease of payment has improved with reduced technological glitches.
- The revenue gains have been significant, the proportion of GST collected to GSDP( gross state domestic product) rose from 5.8 percent to 6.4 percent.
Contributing factors to this improvement:
- Denial of input credit to the buyer without the supplier uploading the invoice.
- Introduction of e-invoicing.
- Introduction of e- waybills for transporters for value exceeding RS 50,000 per consignment.
- Greater coordination between the central board of excise and customs(CBIC) and central board of direct taxes (CBDT) in compliance verification.
What can be done in GST 2.0:
- Amend the law to provide that all units buying from unregistered GST suppliers would have to pay duty on reverse charge basis (the liability to pay tax is on the recipient of supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply.
- Provisions relating to the issue of e way bills and other regulatory procedures must be simplified where purchases are from a smaller unit.
- further incentivise the larger units and encourage them to trade on the TReDS plat, the securities and exchange board (SEBI) can provide higher credit ratings to such units.Merging the 12 percent rate to 16 percent or 18 percent.
- Including gas/ATF under GST in the first round.
- Further reforms would require inclusion of land, real estate and energy in the GST.
Conclusion
- Finally, GST2.0 reforms require the creation of federal institutions.
