India’s indirect tax reform runs into rough weather
The eight-tier tax rates and complicated tax filing procedures have made goods and services tax a hard nut to crack for India's businesses
The Indian government’s indirect tax reform goods and services tax (GST) is facing teething troubles and critics say that instead of simplifying taxation, it has done the opposite with eight different tax rates, the highest slab being 43%, and complicated tax filing procedures.
One of the worst hit are Indian exporters who complain that around US$ 10 billion worth of orders are ‘stuck’ because of GST-related liquidity problems.
The government is mulling a dedicated fund to expedite timely refund of taxes paid on input for export to address liquidity woes of exporters under GST. A corpus of Rs 200-300 billion is under consideration to narrow the input tax credit cycle and facilitate their working capital requirements, reports Business Standard.
The Hasmukh Adhia-led committee, set up to address exporter concerns under GST, had discussed the issue and if approved by the panel, the proposal would go to the GST Council, the daily added.
The other sectors badly hit due to complicated GST filing procedures are small and medium industries. While medium-sized companies are struggling to keep up with the rules, diverting resources that could have been devoted to productive activity, the smaller ones, who can’t afford to hire a tax planner or get online daily, risk facing closure.
India collected Rs 906.69 billion (US$ 13.80 billion) GST for August, a little lower than the Rs 940.63 billion (US$ 14.32 billion) in July. This is also lower than the Rs 910 billion (US$ 13.85 billion) which should have come to the Centre and states in a month, given the Budget Estimates and assumed growth rates in receipts for 2017-18, reports Business Standard. Only 55% of assessees paid taxes for August, compared with 64% for July.