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GST: The simplified and transparent tax regime in India

It has been a long time since the people of India have been bracing themselves for one nation, and one tax. GST –Goods and Services tax was passed on May 6, 2015 by the Lower House of the Parliament; it came into being on July 1, 2017. It is a single tax imposed on the supply of services and goods to make India a common and unified market. In the previous tax regime, there were various indirect taxes like VAT and CST. However, with the introduction of GST, the Indian market system has only one simplified indirect tax.

The GST has been introduced after a 16-year-long wait since it was first discussed in the report on indirect taxes by the Kelkar Task Force. It is beneficial for some while disadvantageous for many. A GST rate of 18% has been applied to polymers and chemicals. It is the second highest in the tax-tier system of 5%, 12%, 18% and 28% respectively. The current tax system is supposed to be advantageous in the long run. Some traders are of the belief that the 28 per cent tax bracket on plastics would affect the consumers belonging to the lower middle income families. The products for daily use are necessities and post the GST, there is a steep hike that has an impact on the plastics industry as a whole.
There has been an average growth in the plastics industry in the past year and they have successfully contributed to the GDP growth of the country. With GST coming into the forefront, the small and medium enterprises would be impacted the most.
“It is too early to come into conclusion since this system has been implemented just a few days back. However, it would definitely simplify business in the long-run. It would take approximately 3-6 months to understand the present tax system,” said Gaurao Bhade, the proprietor of Perfect Exim International. He also added that the input credits have become simpler with the implementation.

Earlier, there were service taxes, excise duties, VAT and CST that were imposed and that was very difficult for the small manufacturers. This present tax system will simplify the online trading process. It is a little haphazard initially. However, with time, everyone will cope with it.

Mr. Shah justified the move to Gandhinagar from the 40-year-old exhibition center in Delhi that lacked adequate power and other basic support by stating that Plastindia will now be closer to the hub of the plastics industry in the country as about 60 percent of the plastics industry in India is based in the state of Gujarat. Mr. Shah went on to say the decision was a unanimous one reached after thoughtful consideration of the size and class of the venue and also the potential of the exhibitors, visitors, researchers, institutes and international participants.

There are multiple benefits of the implementation of the Goods and Services Tax for the industry professionals. The tax rates and structures have become uniform in nature since there are no hidden indirect taxes imposed on the goods as well as the services. On the other hand, the consumers who receive the finished goods would enjoy transparency in the business. “GST has definitely simplified business in India. There were many indirect taxes for manufacturers; it was not a transparent economy. If people follow the proper guidelines, we are definitely going to benefit in the long-run. The parallel economy will come under the tax bracket and that is the most positive impact of GST on the economy,” one of the industry sources said.
The GST is nascent and prediction of its impact is not possible at such an early stage. “It is still in its infancy right now and another 5-6 months would be needed to comment on its proper impact. People have to be patient until then,” the source further added.
Some of the traders predict that under the new tax regime, it would be quite risky for them to dissemble their trading business. Nothing is hidden anymore; all traders whose annual turnover is ₹ 20 lakh or more, has to be registered under the Goods and Services Tax. They have to have their individual GST number so that the government can keep a track of how they are dealing with their business. On the other hand, the manufacturers and processors of plastics industry believe that the current tax regime was much needed in the Indian economy. It has simplified the business and has influenced the unorganised sectors to become organised.

“The GST has made lives easy. We can save a lot of inputs. Earlier, there was an extra taxation as the manufacturers had to go through the local suppliers. The sale of finished products would be more organised in the present system. The business can be affected mildly in the initial stage; however, if the unorganised sectors unite to become organised, they are definitely going to benefit in the long run,” quoted a processor. It is not that easy to administer the Goods and Services Tax. The unorganised businesses have mental blocks that need some time to follow the same pace while the organised sectors would take little time. People should follow whatever is advised by the government. There is an increased burden on trading because a lot of clarification is yet to come. The current buying mood is stable at some places while it’s extremely bad at others. The traders have to go through the initial process that has an adverse effect on their business. As rightly said, “Time heals all things,” the current tax system is in its process to simplify the business transactions. It is just a matter of sometime and then all the anomalies can be removed from the system.

Chief Reporter : Sanchari Banerjee
Email : sanchari.banerjee@polymerupdate.com
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