The next five years of Indian GST would focus on easing compliance through the use of technology and catching the tax evaders. The government’s revenue is bound to accelerate in the next five years, giving enormous impetus to the government for increasing public spending.
The GST is the present government’s most significant structural reform. Trade and industry have significantly benefited from the consolidation of several state and federal taxes and cesses into a single tax. At the same time, end-consumers have benefited from a reduction in overall tax incidence. GST’s IT-driven tax reporting system has made it impossible for value-added chain intermediates to evade taxes.
Many unfinished agenda items are planned to be addressed in the upcoming phase of the GST Law, including reforms, simplification of compliance procedures, rationalization of tax rates, expanding the extent and coverage of the levy, and data synchronization among statutes.
Reduced slab rates
The 15th Finance Commission has proposed a three slab rate GST model. For a long time, the government has wanted to combine the 12% and 18% GST slabs into a mid-level slab of roughly 15%, but it has been waiting for revenue to stabilize.
There are over 40 countries in the world with a single GST slab and only a handful of countries with four non-zero slabs, including India. Italy, Luxembourg, Pakistan, and Ghana are among the countries that use four or more GST slabs..
India has one of the most diverse GST slabs in the world with the highest slab of 28%. In Canada, for example, GST is only applied in two slabs: 5% and 0%. In the United Kingdom, the general GST rate is 20%, but the government has set the GST rates for selected commodities at 5% and 0%.
Multiple GST rates are regressive and add to the litigation. Government will try and reduce the number of slabs in the next five years, It is a strong belief that 12% and 18% tax slabs will merge into one.
Petroleum products inclusion under GST
Given the widespread use of petroleum products, this inevitably causes inflation and raises the cost of all goods. With the price of petrol and diesel spiking, there is strong desire for petroleum goods to be included in the Goods and Services Tax (GST).
In the next five years, even if not all, still, a few petroleum products like natural gas would be subsumed in GST. Given the revenue earned from petroleum products by both the Centre and the States, this will be a challenging but necessary decision. And the GST Council would need to act on this as quickly as possible.
Alcohol
Alcohol is not currently a part of the Goods and Services Tax.
To bring liquor under the GST law, a constitutional amendment will be required, which we believe is not on the cards for the next five years. This may cause further problems for the liquor industry in the near future..
GST and Artificical Intelligence
India is a fast-growing economy that has been at the forefront of global affairs when it comes to technological innovations to improve current economic and other practices.
For the betterment of the public, the government is actively incorporating modern technologies such as artificial intelligence, analytics, and others into existing operations.
The Indian Budget has recently made headlines, and now Artificial Intelligence has made its way into the lexicon of the Indian Budget 2021. “During the coming fiscal year 2021-22, we will implement data analytics, artificial intelligence, and machine learning-driven MCA21 Version 3.0,” Finance Minister Nirmala Sitharaman stated.
Additional modules for e-scrutiny, e-adjudication, e-consultation, and compliance management will be included in this upcoming Version 3.0.”
In the next five years, government servers and big data analytics will become more robust. GSTN system’s capabilities and abilities will be augmented by leaps and bounds..
Abolishment of anti-profiteering
The National Anti-Profiteering Authority (NAA) is actively enforcing anti-profiteering statutes, which prohibit an entity from maintaining higher prices for its goods and services even if GST rates have reduced. Anti-profiteering provisions in the GST law may be deviced like a fixture, which will exist till eternity. Even though the scope of the provisions would be limited to large consumer-centric conglomerates.
Data sharing between government institutions
The departments of Direct and Indirect Taxes have already signed a memorandum of understanding to exchange information on request and on a spontaneous basis, in addition to the regular exchange of data, to maintain the effective transfer and exchange of data, including GST, excise, and customs, as well as personal income tax and corporation tax.
For the taxpayer, this is a facilitating procedure. If they register on the MSME site, for example, they won’t have to fill out every single field because the ministry will get the information immediately from the Revenue Department.
As a result, these organisations will be able to comply more easily by lowering the procedures that are required of them.
Data sharing would become a norm among government agencies, adding to transparency and ease of doing business for taxpayers.
Conclusion
In comparison to other nations, India’s GST ride was relatively smoother. This taxation has made India the world’s fastest developing country, promoting digital initiatives in the taxation environment and resulting in fewer compliance requirements for taxpayers.
The next five years of Indian GST would focus on easing compliance through the use of technology and catching the tax evaders. The government’s revenue is bound to accelerate in the next five years, giving enormous impetus to the government for increasing public spending.
https://cfo.economictimes.indiatimes.com/news/next-5-years-of-gst-in-india/84429004
