As the historical GST completes two years in operation, it is seen as a huge success by industry, stated the Confederation of Indian Industry (CII). CII said that, building on its milestones of the past two years, it is time to implement GST 2.0.
“The Indian model of dual GST is unique in the world and represents a paradigm of partnership between central and state governments and between Government and industry. We compliment the GST Council and CBIC on ensuring its successful implementation and stabilizing operations in just two years,” said Mr Vikram Kirloskar, President, CII.
Mr Adi Godrej, Past President, CII added, “The country is to be congratulated for coming together as one to introduce GST. In just two years, GST has consolidated and is delivering notable outcomes for smoother business, lower logistics costs, and easier payment of taxes in digital mode. We believe GST will be a forceful instrument for driving economic growth for India in years to come.”
“GST is not just a tax change but a business change. It impacted business processes and businesses needed support from Government for this change. And Government did that well – it reached out to industry through trainings by its officers across the country. Indian industry was also really flexible in its approach and that helped in successful roll out of GST,” noted Mr Chandrajit Banerjee, Director General, CII.
India with a strong federal polity managed to get two GSTs to flow together in a unique structure which is not seen in other countries and that has succeeded without many hiccups. In the last two years, the GST Council has commendably worked to reduce number of items in the highest tax bracket, simplify procedures and address input tax credit refunds, said the CII press release.
Stating that GST can now progress to the next phase, CII suggested implementing GST 2.0.
One, based on industry inputs, tax rates on goods and services have been rationalized to a great extent. With stabilization of revenues, there is need to further rationalize the category of 28% to only cover de-merit goods. From a medium-term perspective, a rate structure of 2-3 slabs will be welcome and this can also address inverted tax issues, said CII.
Two, registration and compliances are required in each State for supply of goods and services which leads to increase in complexities, particularly for service sectors with pan India operations. CII suggests adopting a single registration process, with IGST for the respective states being paid by such centralized registrants.
Three, GST provisions on inter-state inter-branch deployment of a company’s employees and allocation of funds is a major concern across sectors. Such cross-charge relates to activities performed by employees at the corporate office such as accounting and other administrative work for units located in different states. GST on cross-charge for services needs to be redressed and be done away with, recommends CII.
Four, certain areas such as electricity, oil and gas, real estate and alcohol should be included under GST at the earliest which will lead to seamless input tax credit availability across all sectors. Meanwhile, interstate movement of these items needs to be allowed at concessional rates through issue of C Forms.
Five, CII added that issues in simplification of GST compliances and filing of returns, matching of invoices and getting seamless input tax credit need to be taken up. The new formats of filing of simplified returns released for trials is yet to be tested.
Other areas such as delays in refund of accumulated tax due to inverted tax and exports coverage and simplification of processes need to be looked into. The Government could consider reconstituting sectoral groups for consultation. Further, Government should set up a Group to review the GST Law and procedures with industry representation. To clear the backlog of disputes, a settlement mechanism or attractive amnesty scheme can be introduced on legacy litigations under erstwhile tax regime.
“The GST Council is proactively examining all issues facing industry and providing solutions. GST 2.0 will take the Indian economy to the next growth level,” said Mr Kirloskar.
29 June 2019