Goods and Service Tax – GST is about to get implemented in India from July 01 and the Indian economy is at stake depending on the readiness of the government and the financial system. Let us see what happened when the other countries implemented it.
Lots of Confusion and Lack of Understanding
South Korea faced challenge in lack of mutual understanding between its institutions and different sectors of economy where unable to come on the same page. Many experts highlighted that Indian economy will be in mess for the next few months because of the implementation. Many financial institutions said that they are not prepared for GST and the ideal date would be September 01, 2017.
There seems to be lot of confusion as there is no clear and basic understanding about GST taxation. Since GST will wipe out the present taxation system, it will be very new for the people and people will have to face difficulties in becoming friendlier with GST.
South Korea had to fight tax evaders as many found a route to evade taxes as the GST was implemented. The officials played hide and seek with each other over GST while the country was turned into a chaotic arena as it wasn’t clear what to do and what not to do.
Excessive Compliance Burden
Presently, there are 13 tax returns every year that a businessmen has to file but after the GST implementation the same proprietor has to file 37 returns (3*12 monthly and one annual). If the proprietor has business in three different states then he has to file 111 returns which will definitely be a complex situation and will be contradictory given the slogan “One Nation One Tax”.
Technological Operational Challenges under GST
In GST, all returns are to be filed online under the GSTN portal that means heavy traffic that can lead to website crash. In present time also while registering to GST, one if facing lots of trouble as there are lots of confusion regarding this. Canada faced the same situation while it implemented GST in 1991 as it saw chaos in financial system and meltdown of vending machines.
In 2015, Malaysia saw chaos in financial institutions after GST rollout. The cash registers weren’t calibrated within the given timeframe leading to snafus.
Multiple Rates amidst Huge Confusion
Australia too experienced tough situation because of GST as the leadership was confused regarding the tax slab. Many wanted a ten percent single tax slab on all products baring important goods and services. Some services and goods have seen a deep increase or decrease in taxation which can either boost or destroy that sector.
India has four slabs which contradict the basics of GST and given 37 returns per year, the traders are going to experience mess and chaos for the upcoming 3-6 months and even more. Let us see what is on the board for the great nation India.