The Central Board of Indirect Taxes and Customs has announced July 1, 2018 as the GST Day
As Goods and Services Tax (GST) completes one full year of implementation, there are many major events that stakeholders have brought about in the year gone by. From the movement of items from one slab to another to the launch of platforms and helplines to ease migration to the new system to the introduction of the E-Way bill, the journey continues. The Central Board of Indirect Taxes and Customs (CBIC), formerly known as Central Board of Excise and Customs, has announced July 1, 2018 as the GST Day, to commemorate the first year of the unprecedented reform in Indian taxation laws. Meanwhile, here’s a look at some major announcements relating to the GST in the past one year.
July 1, 2017: The government rolls out GST, in a midnight launch from the Parliament’s Central Hall. Terming the new indirect tax regime as ‘good and simple tax’, Prime Minister Narendra Modi says GST will end harassment of traders and small businesses while integrating India into one market with one tax rate.
The then President Pranab Mukherjee calls the unified tax system “the culmination of a 14-year journey“.
“Inflation will come down, tax avoidance will be difficult, India’s GDP will be benefited and extra resources will be used for welfare of poor and weaker section,” says the then Finance Minister Arun Jaitley.
Some automakers and retailers announce price cuts as the country switches to the new nationwide sales tax.
July 2, 2017: Global credit ratings agency Moody’s says GST is positive for the country’s credit profile as it would increase government revenues through improved tax compliance. GST will “support higher government revenue generation through improved tax compliance and administration”, it says.
July 3, 2017: The equity markets welcome GST with a surge of more than 300 points in the S&P BSESensex and the NSE’s Nifty50 regaining the 9,600 mark. Gains in FMCG, auto and metal shares push the markets higher.
July 4, 2017: Ratings agency major Fitch says GST implementation will remove domestic trade barriers and help boost GDP growth over long term. The agency however points at significant short-term risks.
The GST Council, at its 20th meeting, finalises the E-Way bill that mandates pre-registration of all goods worth over Rs. 50,000 before they are moved for sale beyond 10 km. It also cuts tax rate on some tractor parts from 28 per cent to 18 per cent and lowers the rate on job work on all textile related items to 5 per cent instead of 18 per cent.
Revenue collections from GST come in around Rs. 94,700 crore in July, the first month of implementation of GST.
World Bank terms slowdown in the Indian economy an “aberration”, mainly due to a temporary disruption caused by preparations for GST. The slowdown will get corrected in the coming months, it further says.
The RBI says GST implementation may delay investment revival, while hoping that there will be simplification of the new indirect tax regime to ease the business process.
The then Revenue Secretary Hasmukh Adhia says some rejig in the GST rate structure is required to reduce the burden on small and medium businesses, and will take about a year to stabilise.
The GST Council, after its 23rd meeting, announces a major overhaul in GST, keeping only 50 items in the highest tax slab of 28 per cent, and moving 178 others to the 18 per cent bracket. The move makes dining out at restaurants cheaper. Goods that would no longer be taxed at 28 per cent include shampoo, deodorant, toothpaste, shaving-cream, aftershave lotion, shoe polish, chocolate, chewing gum and nutritious drinks, the Council says.
The GST Council approves implementation of the E-Way bill mechanism throughout the country.
Meanwhile, the Reserve Bank of India says reduction in GST rates, partial roll-back of duties on petroleum products and farm loan waivers by some states may lead to “fiscal slippage”, fuelling inflation. The central bank also raises the inflation forecast marginally to 4.3-4.7 per cent for the second half of the fiscal year from the earlier estimate of 4.2-4.6 per cent.
The government notifies a lower tax rate of 1 per cent under GST as well as easier norms for manufacturers opting for the composition scheme. The composition scheme enables traders to pay tax at a flat rate without input credits. The GST Council, in its 25th meeting, gives nod to change in tax rates of 29 goods and 53 categories of services.
Chief Economic Advisor Arvind Subramanian calls for petroleum products to be brought under GST. He also makes a case for one rate under GST for all goods and services down the line.
The government eases rules relating to the proposed E-Way bill system, making bill requirements simpler. Among other changes, individual consignment amounting to less than Rs. 50,000 within the state would not require filing of an e-way bill.
Meanwhile, GST collections slide for a second straight month. Collections in February come in at Rs. 85,174 crore as only 69 per cent of the assessees file returns.
Oil minister Dharmendra Pradhan says petroleum products should be brought under GST so that consumers can get the benefit of price rationalization, as fuel prices in Delhi hit record highs.
The government says reintroduction of the E-Way bill system under GST has been “very successful” with no glitches.
The International Monetary Fund (IMF) reaffirms that India will be the fastest growing major economy in 2018, with a growth rate of 7.4 per cent that would rise to 7.8 per cent in 2019 with medium-term prospects remaining positive.
During the same month, Moody’s cuts India’s GDP growth forecast to 7.3 per cent in 2018, from previous forecast of 7.5 per cent, citing higher oil prices and tighter financial conditions. The agency says the ongoing transition to GST regime could also weigh on growth.
PM Modi calls implementation of GST the prime example of “cooperative federalism”. He praises states for taking the decision to implement the tax in national interest. He also says that GST replaced inspectors with information technology.
The IMF says India should carry out banking sector reforms to sustain high growth: continue with fiscal consolidation, simplify and streamline GST, and renew impetus on reforms.