The new taxation regime in India has changed a lot of business dimensions and also ebbed the marketplace. With the implementation of the indirect taxation system in India, the revenue collections became disintegrating. However, the Goods and Services Tax have spread its root over the entire nation captivating more than 1.03 crore taxpayers to register under the regime. But even though the businesses are registered under the taxation regime in such large numbers, only 69% of the total registered taxpayers file returns.The complexity of the return filing process stands in the way ofnon-filers.
The small businesses in India have been expecting the government to make few major as well as minor changes in the regime like:
- The rates cutback– Under the Goods and Services Tax Act, the government had already cutback the rates of most of the necessary items. Moreover, agriculture, which brings two times meal for thousands of Indian families is kept out of the regime by the government. Similarly, a lot of other items like handicrafts, silk, wool etc. also attract zero tax.But the idea to further bring down items from 28% tax slab to 18% would extensively affect the revenue collections as it attracts a majority of tax.
- The inclusion of the oil industries in the regime-On the one hand, the process to bring petrol and diesel under GST is complicated. On the other hand, the government agrees with the fact that even bringing the petroleum industry temporarily under GST umbrella would negatively affect fiscal deficit. Here’s how:
- The sales tax varies amongst all the Indian states.
- The tax levied on the diesel and petrol throughout the nation ranges from 6% to 40%.
- The business of crude oil also involves the dealer’s commission.
- Combining all these factors, the revenue neutral rate would go above 100%.
- Such a high rate of GST in India would definitely not be welcomed by the taxpayers of the nation.
The reason the businesses are expecting the government to include petrol and diesel under GST is only that the process is made sound politically easy. But in reality, it’s not. Hence, the government is trying to keep the idea of including oil industries under GST at bay.
- The exemption of small businesses– There are thousands of businesses in India that only involve small cash transactions. But these businesses are still required to comply with the Goods and Services Tax Act and file returns. Such businesses seek for the exemption. But as per the latest revenue collections and rate of GST in India, exempting any of the business would be an economical-suicide for the government as well as the nation. The reason being the disastrous decrease in the revenue collection in the past few months.
The current scenario
In March 2018, that marked the last month of the FY17-18, the revenue collections were only able to hit the mark of INR 89,000 crores. A marginal dip in the revenues acted as a signal for the government to not implement any measure that might affect the worsened situation. Hence, the government is trying to keep most of the newly implemented processes like the e-way billing system and anti-profiteering system as simple as possible. The taxpayers are already baffled by the collapsed portal responsible for the e-way billing. Also, the number of non-filers have recently been increasing phenomenally. In order to put an end to all the GST-quivering factors, the government has planned to educate as well as facilitate the taxpayers of the nation about the Goods and Services Tax Act.
The biggest tax reform in India- GST Tax in India, has streamlined the taxation in the nation to a great extent. It has also boosted the idea of digitalization and taking the assistance of the technological advancements altogether. But the only reason the regime still lags is due to its complexity. If the government, in the coming months, could overhaul the regime into the simplified and advanced version, then the tax collections will rise automatically. Also, the government had to keep in mind that the regime complies with all kind of businesses and is result-oriented.