{"id":36399,"date":"2018-11-02T12:45:52","date_gmt":"2018-11-02T07:15:52","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=36399"},"modified":"2018-11-02T12:45:52","modified_gmt":"2018-11-02T07:15:52","slug":"entering-the-age-of-gst","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/entering-the-age-of-gst\/","title":{"rendered":"Entering the age of GST"},"content":{"rendered":"<p><strong>Entering the age of GST<\/strong><\/p>\n<hr \/>\n<p>Context:<\/p>\n<ul>\n<li>GST is expected to meet country&#8217;s economic growth for a long run but along with it there&#8217;s a challenge to untangle the initial shortcomings.<\/li>\n<\/ul>\n<p>Pros and Cons<\/p>\n<ul>\n<li>The objective of including real estate within a reasonable time period is appreciated because besides expanding the tax base, this will help in fighting black money.<\/li>\n<li>GST will unify multiple taxes into a single tax and reduce compliance and administrative cost in the long term, do away with levies like octroi and ensure a more unified market.<\/li>\n<li>GST will also reduce cascading on account of levies like octroi, purchase tax and central sales tax and make the economy more export-competitive.<\/li>\n<li>The country might see a significant increase in revenue productivity of income tax as the seeding of PAN in GST registration will make it difficult for businessmen to evade the tax.<\/li>\n<li>But it is to be noted that, petroleum products are excluded and cascading on that account will continue \u2014 they contribute over 35-40% of revenue from indirect taxes.<\/li>\n<li>Also, being an amalgamation of rates it robs benefits from lower administrative, compliance and distortion costs.<\/li>\n<li>The GST puts additional burden on administration, increases the compliance cost and the load-bearing capacity of technology needed for providing input tax credit with multiple rates by matching every invoice.<\/li>\n<li>The requirement of e-way bills for inter-State movements has also been a cause of concern.<\/li>\n<\/ul>\n<p>The short term atrocity in economy:<\/p>\n<ul>\n<li>Because of GST, the short-term disruption in the economy depends \u00a0how well the transition is planned and how fast the economic agents will adjust to the new normal.<\/li>\n<li>For example, the disruptions caused by demonetisation continues to haunt large parts of the unorganised economy even though economy had been substantially remonetised.<\/li>\n<li>Transporters will soon find that the tax paid on fuel cannot be credited against the GST payable on the transportation services rendered by them.<\/li>\n<li>There are questions about the rates of tax, mandated compliances and errors in transition.<\/li>\n<li>Moreover, investment activity is virtually at a standstill, with everyone waiting to see how the reform pans.<\/li>\n<\/ul>\n<p>Conclusion:<\/p>\n<ul>\n<li>In a nutshell, any major tax reform could lead to disruption, and the complexity of the structure and the untested technology platform adds to the fear.<\/li>\n<li>It is very difficult to predict the impact of short time disruptions and the discontent they create.<\/li>\n<li>The government could have used the time until September to provide greater clarity and test the technology through some dry runs to ensure a smoother transition.<\/li>\n<li>The much wanted growth acceleration will take place only in the long term when the transaction cost of businesses comes down.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Entering the age of GST Context: GST is expected to meet country&#8217;s economic growth for a long run but along with it there&#8217;s a challenge to untangle the initial shortcomings. Pros and Cons The objective of including real estate within a reasonable time period is appreciated because besides expanding the tax base, this will help&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/entering-the-age-of-gst\/\">Continue reading <span class=\"screen-reader-text\">Entering the age of GST<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-36399","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704939291},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/36399","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=36399"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/36399\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=36399"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=36399"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=36399"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}