With GST implementation just over two weeks away, there are many roadblocks that India’s biggest tax overhaul may face, ranging from lack of proper infrastructure to government’s own ministries reportedly asking for the implementation of the new tax regime to be postponed from the proposed date of 1 July to 1 September. Doubts over the timely implementation of GST have the two biggest participants, the government and the business community, on tenterhooks.
Here are the problems that each of these stakeholders is facing:
The GST rules have been finalised and notified only last month while some states are yet to notify their laws. With hardly few weeks left before the rollout of GST, there is still confusion about the manner of implementation. The GST Council, the governing body of the entire process, is yet to take a stock of the rollout. It is also yet to solve the e-way bills dilemma, which is bound to affect the transport of goods across states and other remaining issues such as the tax on lotteries and any new proposal from states.
To add to these woes, the Ministry of Civil Aviation has reportedly asked the Ministry of Finance to postpone the rollout of the Goods and Services Tax (GST) from July 1 to September 1, as the Global Distribution Software (GDS) used by airlines to book tickets would require key changes in the system to include GST.
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The small scale traders
GST is a technologically-driven system where every transaction – from invoicing to the payment of tax – has to be done digitally. Although the government has invested heavily in building a technological ecosystem, the taxpayers – companies and individuals – will still need to purchase proper Enterprise resource planning (ERP) and other business process management softwares or hire third-party software providers. Small businesses will be the most impacted due to these requirements. They are busy with chartered accountants and trying to figure out various new softwares which will make filing tax returns easy.
Also, many retailers are unloading old stock at huge discounts to clear their stock before GST is rolled out because they will suffer as 40 per cent central GST will not be credited to them on unsold inventory.
On the other hand, big corporates are having to invest a substantial amount of resources to train their suppliers and vendors so that there is no disruption in their business once the GST comes into effect.