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Torchbearers of the Indian economy and experts from the GST Council recently converged at PwC and CNBCTV18 present GST@2- The Road Ahead and spoke at length about hits and misses of the GST rollout. During the event, the stalwarts of the industry also laid a roadmap for third year of the GST, highlighting the importance of technology in simplifying GST filing.
The insightful event saw a series of panel discussions and keynote addresses from India’s Chief Economic Adviser and members of PwC India.
Setting the context of the event, Gautam Mehra, Partner & Leader- Tax & Regulatory Services, PwC India said use of data, dispute resolution, rationalisation of duties are things one is looking ahead.
The experts made solid observations and comments that set kept the ball rolling. Here are the key highlights
What’s in store for the states?
The maiden panel discussion of the event was a dialogue between GST Council members from different states.
Panellists Mauvin Godinho, Goa Transport Minister; Manpreet Singh Badal, Punjab Finance Minister; Manish Sisodia, Delhi Deputy Chief Minister; and Puducherry Chief Minister V Narayanasami voiced out their grievances and hoped for a redressal in coming months. They divulged on further rationalisation of GST rates in 28% bracket and improvement in revenue mobilisation.
“Almost two-third of the entire economy is outside the GST. Unless you have petroleum, land, electricity, if you recognise this rule of ‘one nation, one tax’, you can’t have such a large segment off your economy,” said Badal, adding “We should now look at it holistically and try and come up with a new version of GST which is scientific.”
During the discussions, ministers from Delhi and Puducherry put forth their concerns. “There is a basic flaw in the GST law because the manufacturing states are in a disadvantage position. Our tax revenue has come down by 45%,” said Narayanaswmi.
Meanwhile, Sisodia hopes for a better federal structure.
“When we say we are a federal structure, we have to have that federal mindset as well. Delhi, since last 25 years, is paying Rs 1.5 crore in tax and gets just Rs 325 crore, whereas rest of states get 42% devolution, Delhi doesn’t even get that. We have to have a federal mindset for course correction,” said Sisodia.
The ministers agreed that issues at macro and micro level had to be resolved.
“The niceties which will come about, further streamlining, further rationalising the rates, try to even convert the 18% and 28% and 12% into one rate and even going further beyond that. We would love to get petroleum products under GST and other things. Federalism is working at its best,” said Godinvo.
Technology: Automating the GST roadmap
Technology plays a pivotal role in streamlining taxation and simplifying filing GST. Today, the modern tech can highlight defaulters and also put in a system for early filing.
Discussing the same, panellists PK Das, Chairman, CBIC; Shyamal Mukherjee, Chairman, PwC India; Prakash Kumar, CEO, GSTN; and Kabir Shakir, CFO Microsoft, said tech could solve majority of the issues.
“The way we are going about with our data analytics, integration with CBDT database with that of CBIC and other databases, we are trying to red flag indicators and people who are not filing returns on time,” said Das.
Talking about industry expectation from GST, Mukherjee said, “The biggest expectation from the industry is how do you reduce compliance on one side and how to use technology to reconcile, on the other. I think that’s where technology needs to be there today.”
“The magic happens when we start using Artificial Intelligence and start using all these datapoints and connect them to see the big picture…today, the reality is 80% of my team’s time and fellow CFOs is spent on matching reports, reconcile stuff, etc. ,” said Shakir.
Meanwhile, highlighting the use of technology w.r.t to GST rollout, Kumar said modern tech such as artificial intelligence and machine learning were being used to identify defaulters.
“We have already started using AI and ML to see how they (defaulters) are behaving so that we can catch them early and ask them to be on the better side of the law. We are using analytics for e-way bill, we have HSN level data, what is moving from one pincode to another,” said Kumar.
Further reduction of rates on the anvil?
India Inc is looking at a further rate cut in the 28% bracket, especially in auto and cement industries. Moreover, they are also expecting GST system to be made simpler.
Speaking about pending decisions, business of anti-profiteering, possibility of further cut in GST 28% bracket and priority areas, Ajay Bhushan Pandey, Revenue Secretary and GSTN Chairman, said during last two years, many items were brought down from 28% to a lower rate, GST filing was made simpler and people can expect relief.
“My priorities are that we make GST system simpler and for that we have initiated a series of projects. For example, filing quarterly results, the tax payers having turnover less than Rs 5 crore, they will be filing only quarterly return, all other dealers will file one return every month and for that there is already a phased implementation plan,” said Pandey.
During the event, PwC also unveiled its 36-page report on GST@2- The Road Ahead. Talking about the report and highlighting PwC perspective, Pratik Jain, Partner& Leader-Indirect Taxes, PwC India, said, ‘While the first year of GST was all about transitioning to the new regime, the second year has been to bring in more simplicity, transparency and stability into the regime. There are many things that have worked and few things which have not worked, so there are more hits and less misses.”
Blueprint for $5trillion economy
One of the major highlights of the event was Chief Economic Adviser Krishnamurthy Subramanian’s vision for hitting $5trillion mark.
During his keynote address, he also spoke about reforms and key learnings for the future
“When I look back at the most important aspect which led to the creation of the GST, it were two key aspects- risk taking in policy making and process of bargaining to bring all parties together. In any reform, it’s a cardinal rule that there are potential winners and losers. The stomach to be able to take risks which his critical for a policymaker together with the willingness to recognise the collateral damage and willing to take concessions that are necessary to bring everyone together are very important lessons to keep in mind,” he said.
Subramaniam also said one of his key focus areas in the $5trillion blueprint was domestic the aspects of India’s growth story.To watch the insightful discussions, watch the full video here.