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