Same as before, the GST Council is again planning to change rates for some products as a way to increase revenue and deal with taxpayers’ woes. Rate rationalisation, which refers to the rationalisation of GST slabs and tax rates in order to make them beneficial for everyone, was discussed in detail at the 45th GST Council meeting. The term has resurfaced again and is being seen by the government as a solution to the ongoing GST problems.
A change in the GST rate system would probably be a good step, but is it the best solution for the situation? Another point to note is that there are only four or five slabs under the current GST regime, which is not much given the popularity and diversity of our country. So, removing one or more tax slabs would probably not solve the GST problems.
Instead, what the government and the Council need to work on is to make the tax system simpler and bring more clarity to what goes in which GST slab, among other things. Industries have been, for five years now, struggling to understand and make their systems compliant with the GST regime. Issues such as technical problems, lack of clarity, etc. are quite common. And while the government has given the facility of advance ruling (AAR), most of its rules and orders seem to be focused mainly on revenue enhancement rather than making GST simpler for the taxpayer.
In addition, the Council must do something about how the power assigned to the tax authorities is being utilised. In most cases, as can be seen through the huge number of writs filed against the orders of GST tax authorities, the power is merely being used to trouble the innocent taxpayers through blocking of credit, penalties and more, whereas most taxpayers seem to be doing nothing but actively following the law in relation to GST filing and tax payment.
The best solution to the GST problem is a systematic approach combining a positive mindset with an efficient product. Rather than just acting as a tax collector, the Council must start acting as a service provider and listen closely to the taxpayers’ concerns. They must make sure that only non-compliant assesses get the heat. At the same time, they must ensure authorities are held accountable for their actions to ensure a reduction in harassment cases pertaining to GST filing and penalties.