GST Reform in India: Moving Towards GST 2.0
Prime Minister has emphasized the need for the next phase of GST reforms, aiming for deeper and more meaningful changes to enhance India's indirect tax system.
Achievements and Challenges of GST 1.0
- Achievements: Since its rollout in 2017, GST has unified the indirect tax structure, reduced the cascading effect, and improved compliance.
- Challenges: GST remains costly, compliance-heavy, and often frustrating for businesses and consumers.
Objectives of GST 2.0
- Simplification: Streamlining the tax process to reduce burden and enhance transparency.
- Fairness: Ensuring equitable treatment for all taxpayers.
- Public Trust: Making taxpayers feel respected and valued.
Core Areas for GST 2.0 Reforms
- Palpable Benefits:
- Implementing a two-slab GST structure (5% and 18%) with a 40% levy for 'sin goods'.
- Reintroducing anti-profiteering provisions to ensure tax reductions benefit consumers.
- Strict enforcement of penalties for profiteering to regain consumer confidence.
- Timely Refunds:
- Addressing delays in GST refunds that affect cash flows for exporters and businesses.
- Introducing a 'refund in 60 days' guarantee with automatic interest payouts for delays.
- End Retrospective Cancellation:
- Abolishing retrospective cancellation of supplier registrations.
- Protecting genuine buyers from penalties unless fraud is evident.
- Extended Time Limits:
- Defining strict criteria for invoking extended limitation periods.
- Placing the burden of proof on tax authorities for claims of fraud.
- Going Faceless:
- Adopting faceless assessments to reduce discretion and corruption.
- Digitizing processes to ensure fairness and efficiency.
Conclusion
GST 2.0 aims to enhance the ease of doing business, reinforce taxpayer rights, and support economic development by fostering a fair, simplified, and trusted tax system. By achieving these reforms, GST can become a catalyst for inclusive and sustainable economic growth.
