GST has been touted as one of the biggest tax reforms since Independence in India. The industry had been wanting for this reform to happen for a long time. The manner in which the Go Live date was celebrated by the government as well as industry was unprecedented. This showed how big a change the country was embarking upon.
There was an apprehension in terms of whether the industry was ready on July 1 to embark on this new journey. There were mixed opinion among different sectors as to whether the government should have given more time or not.
Surprisingly, the first month into GST was quite smooth and there did not appear to be any major challenge that the industry at large faced. The price of the goods/ services to the common man remained unchanged or reduced.
The auto sector as expected had passed on the benefits under GST in terms of reduction in the prices and had a great month in terms of sales. There were a few of the sectors (such as textiles), which were facing challenge in terms of increase in rate of tax.
One must applaud the efforts made by the government in terms of providing clarifications to various issues, which the industry had been facing.
The sectoral groups were formulated to understand the industry specific issues and FAQs were issued to help the industry.
The GST Council, wherever it found merit, approved of changes in the tax rates based on industry representation. The manner in which GST Council has functioned is remarkable and shows the true colours of democracy. All the decisions till date have been taken with consensus and there has not been an occasion, which required a vote to arrive at a decision.
The exporters (for both goods and services) were facing challenges in terms of the process to be followed for exporting goods/ services as well as on account of cash flow issue considering the exemptions (available under erstwhile regime) had been withdrawn under GST. However, relief has been proposed for the same as well by the GST Council recently.
The bigger challenge for the industry and the government came when the compliances under GST began. It is a new system for everyone wherein the whole compliance undertaken across the value chain is inter-linked.
Considering the mammoth task on hands it was expected that there would be teething issues. However, the results were not very encouraging and the industry had to face a lot of more challenge than expected.
GSTN, which is the nodal body for administrating the GST compliances, has come under a lot of fire in terms of their readiness for GST compliances. To be fair to GSTN, there was limited time that they had to be functionally ready for a change of this magnitude.
Also, one would need to understand that any IT system of this stature would take time to stabilise. It is therefore important to manage expectations and there the role of the government becomes extremely important.
(The writers are partner and associate director- indirect tax, PwC. Views expressed are personal)