Public Accounts Committee Recommendations For GST Regime

Brief Context

The Public Accounts Committee (PAC) has recommended a simplified Goods and Services Tax (GST) regime in its 19th report.

Source Content

Syllabus :GS 3/Economy 

In News

• The Public Accounts Committee (PAC) has recommended a simplified Goods and Services Tax (GST) regime in its 19th report.

Goods and Services Tax (GST) 

• The idea of Goods and Services Tax (GST) in India was first proposed during Atal Bihari Vajpayee’s tenure.
  • In December 2014, the Constitution (122nd Amendment) Bill was introduced, passed in 2015, and ratified in 2016 as the 101st Constitutional Amendment, paving the way for GST.
  • GST was officially launched on 1st July 2017 by Prime Minister Narendra Modi, marking a significant step in India’s tax reform.
• It is a destination-based consumption tax levied at all stages, from manufacture to final consumption, with credit for taxes paid at previous stages.
• The tax burden is ultimately borne by the final consumer, and the revenue is allocated to the authority governing the place of consumption (place of supply).

Objectives 

• GST aims to simplify India’s indirect tax system by combining multiple Central and State taxes into one, reducing the cascading effect and creating a unified national market.
• It stimulates economic growth, broadens the tax base, increases trade volumes, and improves tax compliance. 

Challenges

• The implementation of GST has faced challenges, including complex compliance requirements and high costs for small businesses. 
• Frequent changes in tax rates and multiple tax slabs have caused confusion.
• Issues with refund processes create liquidity problems, and cross-border trade is complicated by varying GST rates across states.

Latest Recommendations

• The Public Accounts Committee (PAC) urged  the Finance Ministry to review the current framework to eliminate unnecessary complexities and ease compliance. 
• The Committee expressed concerns about issues in the biometric-based Aadhaar authentication process, potentially hindering the “One Nation One Tax” vision.
• Other Recommendations
  • Streamlining the process by consolidating forms, reducing filing frequency, and introducing a tiered compliance approach for smaller businesses.
  • Improving the portal’s ease of use and providing clearer guidance for taxpayers during filing.
  • Addressing the issue of harsh criminal penalties for unintentional errors in compliance, particularly for honest taxpayers.
  • Using data analytics and AI tools to accurately project GST revenue, addressing the decline in indirect tax share.
  • Implementing a more efficient refund system with clear timelines, regular updates, and a dedicated grievance redressal mechanism.
  • Simplifying GST compliance for MSMEs by automating return filing and refund processing with reduced frequency and easier online reporting.

Source :TH