GST has been rolled out, but by when do you think we can expect a fully functional ‘one nation, one indirect tax’ regime in India? Secondly, what are your views regarding the reliability of the digital portal GSTN?
Vaibhav Manocha, Chandigarh
The ‘one nation, one market’ feature of GST has been brought by the deletion of Entry 52 in the Constitution which gave the states the power to levy entry tax on goods entering their territory. The abolition of the levy of entry tax has come into effect from July 1, 2017. As a consequence, checkposts in all states have been dismantled, and goods can move quickly across the country. Reports based on the experience of truckers say that the time taken for goods to move from one place to another has already come down, reducing the logistics cost significantly. Therefore, in one sense, it has already created a single common market. As far as uncertainties about the procedures are concerned, a number of administrative measures have been taken to clarify matters. A number of GST helplines and GST Sewa Kendras have been created in both the state and central tax departments across the country.
The implementation of the entire GST regime is underpinned by a robust technological system created by the GSTN. All tax returns are required to be submitted online. The system, developed by Infosys, has been tested and has been found to be satisfactory. A two-month relaxation period has been given, during which time the system is expected to settle down. This would mean that the tax returns in the regular format for the month of July would need to be filed only by September 20. In the interim, the taxes for the month of July could be paid by August 20, based on the self-declared turnover in a simple format, which could be reconciled in subsequent months.
Will GST result in a loss of revenues for the states? How will the states be compensated for this loss?
Lalit Lonari, Bhusawal
As per the agreement reached between the Centre and the states in the GST Council, the states have been guaranteed a revenue growth of 14% on the revenues collected by them in 2015-16. Any shortfall of revenues based on this normative growth target would be compensated by the Centre. In other words, a 14% growth of revenue will be guaranteed for a period of five years, and this compensation guarantee has been built into the Constitution Amendment Bill.
In case of a three-tier distribution or higher, will the middlemen also have to pay GST?
Rimika Prasad, New Delhi
The design of the GST is based on the principle that the entire value chain from raw material to retail would be subject to a dual GST, where the Centre and the states concurrently levy GST irrespective of the number of tiers. Compliance would be ensured through a self-policing system in which the buyer would buy goods and services only from a compliant supplier because only then can he avail of tax credits indicated in the tax invoice.