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As we all know, the Goods and Service Tax (GST) is an indirect tax that came into force on 1st July 2017 for the first time in our country and replaced all the earlier Indirect Taxes like VAT, Excise, Service tax etc. It has been seen that many people have negative perception & idea about the newly launched tax regime. Initially, they showed their reactions by protesting & shutting down the shops etc. But is their reaction justified? Has GST affected us in a negative way only?

We live in a democratic society, so everyone has the right to voice their concern. Our purpose here is to not condemn the protests, but to investigate, by looking at facts, whether GST has really produced a negative outcome for different sections or people in the economy.

To make this clear & have factual judgement about GST, we interviewed an experienced Chartered Accountant and a B.Com. (Hons.) graduate from University of Delhi, CA Dinesh Kumar Gupta who qualified his ICAI exams prior to the implementation of GST and is running his own CA Firm successfully in New Delhi. He grew up and completed his schooling in Delhi. He has more than 3 years of post Articleship experience and considering the implementation of GST as an opportunity to Practice, he recently started his own CA firm which specialises in GST Compliances and Direct Taxation.
Below is the conversation we had:-

Vishal (V) – Good Morning Sir! Please have a seat.
CA Dinesh Kumar (DK) – Good Morning! Thank you.

V – Are you comfortable sir?
DK – Yes!

V – Sir, as we know GST is a new thing for all of us. There are number of people who are still not aware of its provisions & many consider it as a bane. So to make it a little more clear & simple, we want to discuss a few things about GST with you. So can I put my queries to you?
DK – Yes Sure! I’ll be happy to help you in making people understand the new tax system and resolving their misconceptions.

V – Thank you Sir!
How do you think GST has affected the businessmen in the country? Is there any difference in its impact on small and big businessmen?
DK – See, overall GST has brought some plus points for businessmen. Earlier Excise duty was collected by the Central Govt. and VAT/Sales tax was collected by the State Govt., which led to need for Double Data Maintenance. This is not the case with GST. Earlier the manufacturers could claim the tax credit for excise only, retailer could claim tax credit for VAT only and service provider could claim tax credit for Service Tax only; but in GST anyone of them can claim tax credit for all types of transaction alike. Hence, tax credit process has become uniformed.

 

Download Important Rules and Conditions for Input Tax Credit – WITH EXAMPLES

 

Another thing, since VAT rates were decided by the State Govt., they differed from state to state. But in the GST system, GST rate for the same product is same across the country. Hence the product is sold at the same price all over the country, which has reduced the competition upto some extent because different prices for the same product in different regions would have changed the preferences of consumers. So by bringing all regions into a single market and creating a level playing field, competition has been reduced.

Now coming to the impact of GST on Small & Big businessmen.

BIG BUSINESSES

SMALL BUSINESSES

  • (Assuming that he/she is registered under Excise, VAT and Service Tax) – Earlier he/she was required to file total 18 returns annually (4+12+2 respectively) but now under GST he/she is required to file only 13 returns annually.
  • GST has reduced the need for data duplicity as there is full transparency in the process.
  • GST initiated free flow of tax credit.
  • (Assuming that small businessman is having annual turnover upto ₹ 1.5 crore) –  He/she is required to file total 4 returns annually.
  • Businessmen having turnover more than ₹ 20 lakh are required to get GST Registration number which increased the burden of small traders.
  • Earlier small service providers having annual sales upto ₹ 10 lakh was exempted from service tax but now all of it is taxable.

 

V – Sir, the Introduction of GST has brought many challenges for CAs and Accounts Professionals, but also some career opportunities. What do you have to say on this?
DK – See, as a professional. I have faced the following two challenges till now. Both of these major problems are from technical department. Firstly, due to slow processing, the amendments are not updated on the GST portal immediately. It takes around 8-10 days to show the latest amendments. Secondly, most of the time site gets crashed and is unable to handle large number of users at a time. Initially, it was decided to file GSTR1, 2 & 3 but due to persisting technical problems, filing of GSTR 2 & 3 is not implemented yet. Hence the problem in retrieving old data may arise if it is made compulsory to file GSTR 2&3 of previous months as well in future.
GST has been very dynamic till now as amendments are made so frequently. Another major problem was lack of clarity of GST provisions among clients. It became kind of a repetitive task for us to clarify same thing again & again to different clients which distracts our focus from the core activities.
But yes! GST brought opportunities as well.
As GST is new for everyone, it brought the experienced professionals & new professionals both at same level. It also created job opportunities in market for commerce graduates as even a small trader needs to hire an accountant now for GST compliance. GST gave the opportunity of practicing to the professionals. It also affected the income of professionals positively as annual turnover limit required for auditing is reduced to ₹ 2 crore.

V – Sir, do you think CA Articles require extra knowledge of taxation and Accounting to do their jobs, other than the course material they study for CA exam?
DK – Yes you can say that because CA articles require knowledge of Operating Procedures in GST to fulfil their duties as an article, which they are not taught in CA course. One has to refer to other books and materials to gain deep knowledge.

V – Sir is there any problem caused by GST to the articles who completed their CA before the implementation of GST (like due to any change in course)?
DK – Not much! As I have also completed my CA before 1st July 2017, GST is a reflection of previous indirect taxes so if your basics about previous taxes are strong, you won’t get much problem in understanding GST and working with it.

V – Sir, do you think GST has affected the entry of entrepreneurs in the market in a positive or negative way?
DK – As it provided various self-employment opportunities, the number of entrepreneurs might have increased. I don’t think that GST has such an impact that one had to shut down their business, even though it might have disrupted some businesses dealing in tractor components, raw cloth etc. for some period as they have a higher tax rate under GST.

V – Sir, as a professional, any general message you want to convey to the public?
DK – To the general public, I want to say that GST is not a negative thing & it’s mostly beneficial for everyone despite its few limitations. It’s just a replacement of previous indirect taxes. And indirect taxes are not new to us. We were paying them before the implementation of GST as well. So take it positively.

V – Thank you so much sir for giving your valuable time to our queries; I hope your answers will bring some clarity for the public in understanding the new taxation system.
DK – My pleasure Vishal & I hope the same.

 
 
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