Challenges faced by Goods and Services Tax Regime in India

Goods and Services Tax in India:

The Goods and Services Tax is a comprehensive indirect tax in India levied on sales, manufacture and consumption of goods and services. It came into effect through the 101st amendment in the constitution of India on 1st July, 2017. It is considered as one of the biggest tax reforms in India till date. It was introduced as an attempt to make India one unified common market place. The Goods and Services Tax replaced the old taxation system and subsumes all the previous taxes like VAT, sales tax, excise duty etc. it is a very big step towards reforming India’s taxation regime. It covers up everything from GST Registration, GST refunds process and all the processes that are important under the new taxation laws.

Benefits of Goods and Services Tax in India:

  • Removal of different and hectic taxes such as VAT, CST, Service tax, Excise etc.
  • Tax compliances are less and simplified policy compared to existing tax structure.
  • Reduction of cost of manufacturing due to lower burden in taxes.
  • Lower the tax burden on the common people.
  • It Increases the demand as well as consumption of goods.
  • It will lead to increase in the production of goods.
  • Control of black money circulation in the country.
  • In the long run it will give boost to the Indian economy.

Challenges for Goods and Services Tax in India:

The Goods and Services Tax regime have always and continue to face the following challenges for its implementation in India.

  • Threshold limit for GST has always been a point of concern and matter for the central and state governments. For achieving a broad tax based structure the central government has to keep in mind that it doesn’t put extra burden on the state governments.
  • Consent of the states with each other and the central government is really important. Firstly it was the bill that has to be passed for bringing in GST for implementation by getting majority in the parliament.
  • Extensive training to be provided to the taxation staff was a prominent challenge it was like changing the whole system of tax that they have been used to.
  • Clubbing different taxes into one indirect tax is not an easy task. Taxes related to different areas have to be kept in mind and made in one.
  • New enactments and statutes have to be introduced in the country to regulate the new GST Regime.
  • The IT network has to be robust in order to ease the taxation process for the citizens. For this new GST Portal website was opened so that people can avail the different schemes, access about the GST Regime at the very comfort of their house.
  • Determining the rates for Goods Services Tax was another difficult task as all the goods and services were to be taxed under these rate slabs.
  • The government also had to make an effort to build infrastructure for collection of the taxes under the new regime.
  • Defined procedures for levying inter-state transactions had to be introduced.
Author: Anil Agrawal
EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or