July 1, 2018, was the first time GST implementation took place in India. Now almost one year has passed and a lot of changes have been witnessed in terms of GST news update.
A total of 28 meetings have gone on to occur and numerous modifications have been made to the act.
This change has taken place in respect to procedures, process or be it the technological platform. Even the diehard critics would be forced to admit that the government has gone on to do a great job of paving the way for a plethora of taxes to one single GST.
The revenue collections have already touched 95,000 crores and in the coming year or so is expected to touch 100,000 crores.
But after one year of implementation, there have been some highs and lows of GST. It has to be stated that, baring certain sections of business, a remarkable efficiency has been witnessed as far as improvement in collections of GST is witnessed.
The points to remember after 1 year of GST implementation
- For starters, GST has enabled to get rid of the ill effects of an indirect taxation regime in the days gone by. Now you might try to figure out what is the cascading effect. The moment you manufacture a product, there is already a sales tax you might have put on to the process. When it was the old regime, there was no form of credit for such expenses. This amounted to double counting and a cascading effect on costs was created. As per the latest update on the GST bill, an automatic input tax could be set off against GST payable. The entire process has gone on to become a seamless affair.
- The moment a rise in inflation is witnessed, it may point to a rise in input costs. This points to the fact that the profitability of a business increases and it might be benefitting from a seamless credit due to input costs. The process is not only simple but a transparent one.
- The rates of GST on essential items have been reduced drastically. For example, most food items for mass consumption have been reduced to the bracket of 0% to 5%. As per the latest update, the GST on electronic items has been reduced from 28% to 18%.
- With the introduction of an e waybill, it has gone a long way to reducing the loopholes with GST payments when you go on to transport goods. Yes, to a certain extent, it has added a certain level of bureaucracy from a simplicity and transparency point of view it is a commendable job.
- One of the better pieces of news is that GST has not paved the way for inflation. In other countries of the world, like Australia, GST has contributed to inflation in the first 3 years. Even the impact was seen for the first 3 years. In India, the inflation was more related to food and oil inflation and it had got nothing to do with GST.
- A major impact of GST is that companies have gone on to design and not to redesign their logistical process and warehousing needs based on business needs and not on an interstate tax regime. This does go on to provide a better business outcome that is likely to unlock value in the coming year. For this reason, a lot of companies are facing an unlock value in the last few years.
- Though the full benefit of GST can be felt when petrol along with diesel is brought under the ambit of GST. Till now, the situation does not seem to be the case as the cess on petrol along with diesel still accounts for a major chunk of state revenue and no one wants to miss out on that. But there has been some positive response from the concerned ministries that petrol along with diesel might be brought under the bandwidth of GST.
- GST is not only about positive connotations, but there are bound to challenges during implementing it. First and foremost, the GST payment was not seamless, as it was assumed in the days leading up to it. The refunds have been seamless. All the more in case of exports as it is seamless. But they do require claiming credit for the input tax that is paid. But this has gone on to be delayed in the last 1 year, and this has gone on to create a serious problem for an exporter in India.
- A profit cut rule was introduced by the GST council that any tweaks would be passed on to the customer. The drawback is that any profits emerging out of this rule have been neglected. Eventually, all rate cuts are not passed on to the customer until the point it works out to be a competitive industry and where the manufacturer does not have any choice.
- The main objective of GST has been to bring a host of business under its umbrella. They can be brought under taxation and this has to be the case both in the case of an organized and unorganized sector. Nearly 9.8 million businesses have gone on to register and even the collection is nearly about the same level. Still though it is not clear whether the expansion of the taxes has been fruitful. In this regard, we have to wait for some point of time.
Now let us explore the platform from where we can avail of all the financial information at our fingertips. The obvious answer has to Business Standard, that has around 10 million visitors to their site every month.
One of their latest news updates is that if you are planning to invest in small-cap funds you have to embrace high volatility. In the last two years, if you have gone on to invest in such funds, then a significant erosion of your investments might have occurred. However, of late, there has been some degree of recovery.
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