Five things Arun Jaitley can do to make GST more effective

The 23rd GST Council meeting in Guwahati on 10 November came as a big relief for most businesses with the council announcing a slew of measures that not only lessen the compliance burden on businesses, but also reduced the tax rates on several consumption goods.

This may be the first step towards the much-awaited overhaul in the Goods and Services Tax (GST), the overhaul is anything but over. There are more other steps that the government must take to make GST indeed a good and simple tax as prime minister Narendra Modi has promised.

Here are some of the steps that government may/should take in future to make GST more effective and hassle-free tax regime:

Move towards simpler tax structure: The government has cut down the number of goods and services in the 28% tax bracket from 228 to just 50. Probably, this is the first step towards doing away with the 28% tax bracket completely. For now, a 3-rate structure -- 5%, 12% and 18% -- would make GST regime much more simpler.

Quarterly filings: For now, the GST Council has given by exempting taxpayers from filing GSTR 2 and GSTR 3 till March 2018. But one of the main demand from industry was to allow quarterly filings for businesses with revenue of more than Rs 1.5 crore. For now, the council is silent on allowing for quarterly filings for all. It may need to consider this demand as and when the invoice matching concept kicks in after March 2018.

Allowing input tax credit for composition scheme: Those businesses availing composition schemes are not allowed to claim input tax credit. This could prove to be a spoil sports for many businesses availing this scheme. Since the government is considering increasing the composition threshold in the future, allowing input tax credit may make the scheme more attractive.

Bringing many exempted goods under GST: There are certain sectors like petroleum, electricity, real estate and liquor out of GST. Keeping them out of GST means businesses operating in these segments would not get the benefit of input tax credit. This is a loss for these businesses. Besides, it means that these sectors would be at the mercy of state government in terms of indirect tax rates. Some of these sectors especially oil and gas sectors have been demanding that they should be included in the GST. Experts say ideally all sectors should be under GST, but doing it would take some time.

Doing away with E-way bill: Another demand of the industry is doing away with e-way bill, which is an electronically generated document for movement of goods worth Rs 50,000 or more. Though implementation of e-way bill has been deferred till April 2018, experts say in GST, which is a consumption tax, there is no need for a check on movement of goods and hence e-way bills. However, Council has been silent on this. Meanwhile, GST Network has been running a pilot in Karnataka and is likely to expand it in other states.

But the industry fears that e-way bills, which have to be uploaded on GST Network, would be another technology mess waiting to happen as an when it is implemented.