GST 2.0

As the Goods and Services Tax (GST) completes eight years of implementation on July 1, tax experts acknowledge its successes but say a lot more work needs to be done in terms of simplification and rationalisation of rates. 

Achievements So Far

• GST replaced a complex, multi-state indirect tax system.
• Brought uniformity in tax treatment across States.
• Improved compliance via digitisation and e-invoicing systems.

Key Reforms Suggested (GST 2.0)

Inclusion of Fuel and Electricity in GST

• Items like petrol, diesel, ATF, natural gas remain outside GST.
• Their inclusion would:
  • Reduce tax cascading
  • Ease cash flow issues for sectors like transport, logistics, oil & gas
• Inclusion requires GST Council approval

Rate Rationalisation:

• Current system: Five major slabs – 0%, 5%, 12%, 18%, 28%
  (plus special rates: 0.25%, 1%, and 3%)
• Suggestion: Reduce to fewer slabs for simplicity and efficiency
• Rationalisation will aid compliance and reduce classification disputes

Minimising Input Tax Credit (ITC) Restrictions:

• Multiple ITC restrictions have caused confusion and litigation.
• Experts call for a more liberal and transparent ITC mechanism

Streamlining Audits and Dispute Resolution:

• Absence of a GST Appellate Tribunal (GSTAT) delays resolution of appeals.
• High pendency of GST-related cases
• PwC recommends revisiting dispute resolution frameworks for faster redressal

Addressing Procedural Hassles:

• Procedural complexity and litigation on minor issues overshadow compliance efforts.
• Need to simplify:
  • Audit norms
  • Return filing
  • Compliance mechanisms

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