One year of GST: Report card of India's biggest tax reform

India's businesses saw a complete makeover with the introduction of Goods and Services Tax, dubbed as one nation one tax. It aimed at to remove the cascading effect of 'tax on tax', and reducing the overall prices of most of the items.

The GST -- India's biggest post-Independence tax reform -- engulfed around 17 taxes and multiple cesses, aligning India with global regimes. Central taxes such as excise duty, services tax, countervailing duty and state taxes - including value added tax, octroi and purchase tax - were all rolled into one.

According to the Finance Ministry, the GST system has stabilised since rollout and some 1.11 crore businesses have registered themselves under the regime. The government claims that the average monthly compliance of return filing and tax payment should rise to around 96 per cent in a few months. The government is expecting to mop up on an average Rs 1 lakh crore in taxes every month. The industry too welcomed the tax reform despite the initial hiccups. The GST Council ironed-out major issues in 27 meetings over one year.

A World Bank report on GST states that India's GST structure was among the most complex in the world with not only one of the highest tax rates but also the highest number of tax slabs as compared to other countries.

The total GST revenue collections have been inconsistent with the first few months seeing impressive GST collections of over Rs 90,000 crore and then a gradual slide to Rs 83,716 crore in December, post which it has again picked up. In April, it scaled to over Rs 1 lakh crore but has dipped to Rs 94,016 crore in May. The average GST collection for the last fiscal was Rs 89,885 crore.

India's equity benchmark BSE Sensex has gained 13.67 per cent since GST was rolled out till June 26 this year. The index which represents the consumer durables sector advanced 26 per cent in the same period.

The biggest dampener in GST was the compliance process. Technical flaws blocked the smooth rollout. The filing system that was put in place in the beginning was quickly abandoned as businesses struggled with compliance. A new return form is being crafted to help make the process much less painful for businesses and is likely to be available soon.

According to the Economic Survey 2017-18, a preliminary analysis suggests there has been a 50 per cent increase in the number of indirect taxpayers, besides a large increase in voluntary registrations, especially by small enterprises.

Delayed refund to exporters
The delayed refund of Integrated GST (IGST) has led to blockage of working capital funds with export houses. The export industry faced a slump in growth, registering only Rs 30,280 crores in 2017-18 as against the anticipated Rs 32,500 crores in the previous fiscal year. The textile industry, in particular, is expected to stare at a loss of Rs 1,500 crore refunds budgeted for this year.

Next year in focus
The second year of the GST may witness

• Simplification of compliance process
• Ease in generation of e-way bill for barrier free movement of goods
• Next year, taxpayers will be required to fill out a simpler return like a GSTR-3B to avail input tax credit without the hassle of matching the claims across multiple returns.