Towards simplification: Ease of paying GST is a long-pending reform

The government continues to tinker with the rates and regulations surrounding the goods and services tax, or GST, which was introduced more than six months ago. In many cases, these changes are for the better, in response to feedback from the public. For example, although the GST Council, the governing body for the federal tax, failed to agree on a procedure in its meeting this weekend on simplifying the tax-filing process, it is clear that such simplification is very much on the agenda and may be agreed upon and implemented soon. The proposal is to eventually whittle down the number of required submissions to two — a return and a supplier’s invoice. This would be an excellent step forward and an important way in which the GST can be turned into a less of a burden for small businesses. The GST Council’s efforts to make it easier to pay the tax are welcome, and it should continue to deliberate on how best to further the aim of tax compliance through greater ease of payment.

 

However, it is unfortunate in a way that it has taken six months or more for the question of ease of compliance and low-impact paperwork to actually make its way to the forefront of the policy agenda on the GST. It is another sign that the tax, which is no doubt well-conceptualised, has not been implemented with the necessary level of efficiency, thought, or preparation. Too many issues of implementation have been raised from too many different quarters. One major issue, of course, is the difficulty of filing returns, the issue the Council is now trying to address. But many others remain. For example, it is feared that the government is not being completely straightforward about providing refunds for the integrated GST, or IGST, in particular. There is a concern, hopefully unfounded, that delays allow the government to manage its spending figures and its cash on hand. This would clearly be unsustainable if it were actually the case. The GST concept it built around easy tax payments and swift refunds where mandated. If one or both of those requirements is not met, the adoption and efficiency of the tax will suffer.

 

The GST, which has been in the works for years, should ideally have been better designed when it was launched, and that would have enabled a smoother transition. Indeed, too much remains to be done still. The question of how and whether to bring the petroleum and real estate sectors  within the purview of the tax is now being discussed, although both should have been pushed into the tax long ago. Also, more accountability and transparency are needed. State governments are confused as to why receipts have been falling for months on end; meanwhile, exporters complain that their refunds are not coming on time. The GST Council, composed as it is of high-powered officials, cannot discuss such problems in detail, meaning that they fester with no resolution in sight. Thus, the recent move to simplify the filing of the tax should not take place in isolation, but should be part of a larger agenda of simplification and increasing accountability.