{"id":25532,"date":"2021-02-05T12:39:26","date_gmt":"2021-02-05T07:09:26","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=25532"},"modified":"2021-02-05T12:39:51","modified_gmt":"2021-02-05T07:09:51","slug":"post-gst-implementation-scenario-in-india","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/post-gst-implementation-scenario-in-india\/","title":{"rendered":"An Comparison of Post-GST Implementation Scenario in India"},"content":{"rendered":"\n<p class=\"has-drop-cap\">As India has celebrated the 72nd Republic Day, it is also a preparation for another important milestone. Great hopes had been placed on the <a href=\"https:\/\/corpbiz.io\/gst-registration\"><strong>Goods and Services Tax<\/strong><\/a> (GST) after the pandemic effect of Covid 19, where after the GST implementation has provided freedom to Indian citizens from the tyranny of multiple levies and tax rates. This tax combined almost all state and central indirect taxes into a single category, creating a single market in the country.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/post-gst-implementation-scenario-in-india\/#The_Practice_of_GST_at_International_Level\" >The Practice of GST at International Level<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/post-gst-implementation-scenario-in-india\/#How_Indian_GST_Implementation_Differs_from_other_Countries\" >How Indian GST Implementation Differs from other Countries?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/post-gst-implementation-scenario-in-india\/#Lessons_of_GST_Implementation_from_Other_Countries\" >Lessons of GST Implementation from Other Countries<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/post-gst-implementation-scenario-in-india\/#Concluding_Remark\" >Concluding Remark<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Practice_of_GST_at_International_Level\"><\/span>The Practice of GST at International Level<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>The main objective of implementing the GST\nregime in France was to prevent tax evasion which was prevalent in the country\ndue to high tax rates.<\/li><li>The European Union adopted a system to replace\nthe turnover tax with the aim of generating revenue on goods of general\nconsumption.<\/li><li>The GST was implemented as a federal tax which\nwas collected by the Centre and distributed to the states in Australia.<\/li><li>In China, the tax system only applies to the\nprovision of goods, repair, replacement and processing services.<\/li><li>Countries like Singapore and New Zealand tax charges\nalmost everything at the same rate.<\/li><li>Indonesia has five positive rates, one zero rate and more than 30\ncategories of discounts.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_Indian_GST_Implementation_Differs_from_other_Countries\"><\/span>How Indian GST Implementation Differs from other Countries?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The structure of\ntax in India is different from other countries because it is payable at the end\nof consumption. Typically, tax is collected on value-added goods and services\nat each point of the supply chain. <\/p>\n\n\n\n<p>Being a union of states, India follows a dual tax structure i.e. separate tax schemes for the centre and states and the same will be applicable for GST governance. Also, while rates in other countries are around 15% to 20%, India&#8217;s rates are approx 5% to 28% lower than other countries.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/online-gst-return-filing-procedure-types-due-date-and-penalty\/\">GST Return Filing Procedure \u2013 Types of GST Returns, Due Date and Penalty<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Lessons_of_GST_Implementation_from_Other_Countries\"><\/span>Lessons of GST Implementation from Other Countries<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/02\/Lessons-of-GST-Implementation-from-Other-Countries.png\" alt=\"Lessons of GST Implementation from Other Countries\" class=\"wp-image-25557\" width=\"528\" height=\"535\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/02\/Lessons-of-GST-Implementation-from-Other-Countries.png 985w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/02\/Lessons-of-GST-Implementation-from-Other-Countries-296x300.png 296w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/02\/Lessons-of-GST-Implementation-from-Other-Countries-768x780.png 768w\" sizes=\"(max-width: 528px) 100vw, 528px\" \/><\/figure><\/div>\n\n\n\n<p><strong><em>Listed below is GST implementation lesson, India learnt from other countries for:-<\/em><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Inflation<\/h3>\n\n\n\n<p>New regime of\ntax (GST) has brought with it great concern in terms of its implementation.\nEven in the between of all the unpredictability &amp; challenges, there is a\nbelief that in the long term it will promote higher GDP growth and profit as a\nwider tax base.<\/p>\n\n\n\n<p>As per GST tax\nrates, about 50% of goods fall under the 18% tax rate. In the earlier indirect\ntax regime, for many items, excise and state VAT and all other taxes increased\nby more than 25%. Therefore, many of the prices of manufactured goods should\nfall under GST.<\/p>\n\n\n\n<p>Under GST for\nall goods and services, manufacturers can ITC. This means that at the time of\npaying the tax on the output, manufacturers can reduce the taxes they have\nalready paid on the input. <\/p>\n\n\n\n<p>In the earlier\nregime, many taxes such as CST, entry tax, octroi and many cesses were not\nfeasible. This resulted in a wider impact of taxes. Removing the cascading\neffect under GST should also help in reducing prices.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">GST Implementation<\/h3>\n\n\n\n<p>Another lesson\nlearned from Malaysia is that businesses need to start with the implementation\nprocess to be GST-ready. It is necessary for businesses to undergo radical\nchanges to adapt to the complex GST regime.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">High Tax Rates<\/h3>\n\n\n\n<p>GST rates are\ntypically between 16% &amp; 20 % worldwide. Lower rates can help reduce tax\nevasion rates in the economy in the long term.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">GST Implementations Considers MSMEs and Large Organizations Equally<\/h3>\n\n\n\n<p>The Indian GST considers <a href=\"https:\/\/corpbiz.io\/msme-registration\"><strong>MSMEs<\/strong><\/a> and large organizations equivalent &amp; has a very low (Rs 20 lakh) exemption limit without any tax discrimination. But the large corporations have the resources to invest, change their systems and get ready for GST, this will be challenging for MSMEs provided the limited resources.<\/p>\n\n\n\n<p>It also must be\nremembered that Malaysia suffered comprehensive unrest and street protests by\nsmall and medium businesses in Kuala Lumpur for a few months after\nimplementation even though they enjoyed simpler systemic requirements and much\nhigher exemption limits than India.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">GST on Liquor<\/h3>\n\n\n\n<p>Liquor is being\nkept outside GST for human consumption, with each state free to set its own\nrates. These regions account for about 40% of the state&#8217;s revenue. However,\npost-GST, they are taxed at 18%<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Input Tax Credit Payment<\/h3>\n\n\n\n<p>GST\nimplementation of Malaysia revealed that timely payment of ITC refund is\nmandatory. Until the necessary technology infrastructure is established, it can\ntake months to return tax credits, which can lead to cash flow problems for all\nlinks in the supply chain.<\/p>\n\n\n\n<p>The ITC will be available in India only if the supplier has filed his <a href=\"https:\/\/corpbiz.io\/gst-return-filing\"><strong>GST return<\/strong><\/a>. If the supplier delays or files an incorrect return it will delay the input credit &amp; blocks the funds. Thus organizations will need more working capital resulting in increased costs.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Dual GST Complications<\/h3>\n\n\n\n<p>Most countries\nhave implemented the model GST, which has all indirect taxes under one. India\nhas implemented dual GST with separate central and state component.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concluding_Remark\"><\/span>Concluding Remark<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nadministration of the dual GST model is the biggest challenge facing India.\nIndia should follow both in applying the law in developing countries and\nsuccessful administrative strategies of developed countries like Singapore.\nProper audit planning (to reduce the difference between the taxpayer&#8217;s reported\nand actual statutory tax liability) is needed to cover various economic\nactivities and a large diversity of taxpayers, as done by Singapore and\nMalaysia. <\/p>\n\n\n\n<p>However, <strong><em>India<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/India\"><strong><em>[1]<\/em><\/strong><\/a><\/sup> follows the electronic e-filling and invoice matching system, which made it difficult to avoid taxes. However, the collusion of business partners in the distribution chain can lead to tax evasion. Regular audits are necessary for the implementation of India&#8217;s GST. In addition, adequate training is required for both taxpayers and promoters. <\/p>\n\n\n\n<p>The government should ensure that they have a sufficient number of experienced tax agents to handle the grievances of the taxpayer and the exporters and other taxpayers should be well prepared for timely refunds so that they do not face cash flow problems. Kindly associate with the <a href=\"https:\/\/corpbiz.io\/\"><strong>Corpbiz<\/strong><\/a> expert to know more about the post GST implementation<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/cbic-extension-of-deadline-for-gst-return-filing-fy-2019-20\/\">CBIC: Extension of deadline for GST Return Filing FY 2019-20<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>As India has celebrated the 72nd Republic Day, it is also a preparation for another important milestone. Great hopes had been placed on the Goods and Services Tax (GST) after the pandemic effect of Covid 19, where after the GST implementation has provided freedom to Indian citizens from the tyranny of multiple levies and tax [&hellip;]<\/p>\n","protected":false},"author":32,"featured_media":25556,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16],"tags":[1506],"acf":{"service_id":"96"},"authorName":"Komal Singh","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/processed.jpeg","authorDescription":"Komal Singh is a Legal scholar, having diverse experience in scripting research papers, articles &amp; dissertations, which serves her main interest &amp; competent in drafting legal documents. She has polished her skills in dealing with the matter related to consumer affairs and now building intelligible Legal Content for Corpbiz.","postViews":4697,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/25532"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/32"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=25532"}],"version-history":[{"count":9,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/25532\/revisions"}],"predecessor-version":[{"id":25559,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/25532\/revisions\/25559"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/25556"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=25532"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=25532"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=25532"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}