Tax system must be designed in such a way that on the one side it encourages self compliance and on the other side, there must be internal...
Tax system must be designed in such a way that on the one side it encourages self compliance and on the other side, there must be internal check and balances in it, which discourage wrong and fraudulent practices and person who are trying to bypass the system can be caught by the system itself.
Goods and Services Tax (GST) has both of these features, on the one side GST rates Structure has been determined in such a way so that overall impact of tax reduced Vis a Vis to earlier tax regime on the other side by introduction of Intrastate and Interstate ewaybill keep a check on under reporting of the taxable transaction.
GST rates has been divided in different categories in such a way so that lesser tax or nil tax is applicable on goods used by common and poor pubic like fruits and vegetables ,all unbranded food items, essential services and higher tax applicable for goods used by rich persons or demerit goods like cars, tobacco etc.
GST rates has been basically divided in five categories
- 1. Exempted goods and services
- 2. 5% slab (essential goods and services)
- 3. 12% standard goods and services
- 4. 18 % Residuary items (general rate)
- 5. 28 % Special Luxury goods
Further 3 % rate is applicable on gold, gems and jewellery and 0.3% rate is applicable on precious stones.
Besides general rate as given above, GST compensation cess is applicable on demerit goods like pan masala, tobacco, cars etc.
Many changes have been notified in GST rates, rules and procedures by the Govt on the recommendations of the GST council to make GST compliances simple. These changes have been made on basis of experience and inputs received by the tax authorities through various returns and statements filed by the taxpayers as well as on the basis of feedback from the public at large through various channels. Initially 28% rate was applicable on more than 200 items but at present 28% GST rate is applicable on less than 30 items only.
The basic motive of the introduction of GST is to provide good and simple tax system which is easy to understand and easy to comply with. After simplification of GST tax rates the next step in right direction will be simplification of the return forms. At initial stage person were supposed to file three basis returns GSR-1, GSTR-2 and GSTR-3 but now it is under consideration to introduce simple single return on monthly basis. Further for composition dealers only quarterly return is required to be filed.
Now comes to Eway bill, E way bill is a information /statement which is mandatory to be generated online for Inter/Intra State movement of goods of consignment value exceeding Rs.50,000/- in motorized conveyance. To generate eway bill registered GST Taxpayers can register in the e-Way Bill Portal using GSTIN. Unregistered Persons/ Transporters can enroll in the e-Way Bill System by providing their PAN and Aadhaar. E way bill can be generated by Supplier/ Recipient/ Transporter.
E way is not applicable on certain exempted goods defined under rules 138 of CGST rules , further no eway bill is required for non motorized conveyance.
After introduction of the eway bill the tax compliance has been increased .Monthly figures of GST collections has improved after introduction of E way bill in parts of country. E way bill is applicable throughout the country from 01.06.2018 for inter as well as intra state movement of goods.
To sum up, GST system has used effectively both carrots and sticks method.On the one side simplification is the USP of GST system on the other side checks have been placed by way of introduction of e way bill. We hope both of these approaches will be helpful in achieving the desired results.