India’s GST (Goods and Services Tax) reform represents a fundamental break in tax arrangements for goods and services, going so far as to require a constitutional change. The GST splits up taxation responsibilities by allowing the states to tax the supply of services, and the Union Government to tax the supply of goods. This new formula will dramatically change the Indian tax landscape, creating new challenges for buisnesses and regulators alike.
India’s new GST is intricate and complex. The tax has a complicated dual nature, which divides responsibilities between the Union and the States. The new tax system also involves a multiple rate structure, a shift from the origin (where production takes place) to the destination (where consumption or supply takes place), and involves the establishment of GST council to which both the Central Government and 29 State Governments have ceded some tax authority. The GST also establishes a centralized IT platform for some components of administration, called the GST Network in a Public Private Partnership.
Stakeholders recognize that the potential benefits of the GST in creating a unified internal market, simplifying complex supply chain logistics, and decreasing tax compliance costs crucially depend on the smooth implimentation of the new tax.
This smooth transition is in turn dependent on appropriate training of tax administrators at Union, State, and Local levels. Taxpayers, and of those advising the taxpayers, must also be trained in the nature of the new tax. Finally, efforts must be made to create awareness about the GST among the stakeholders, including the general public.
Given the enormous complexity of the GST reform, it is essential to change the ‘business as usual’ mind-set of policymakers, tax officials, and those affected by the GST. Educating these stakeholders on the nature of the GST is the only way to actually lower logistics and supply chain costs, reduce comliance costs, and help increase the share of recorded transactions in total transactions.
In their public outreach, training, and awareness campaigns, the States need to play their part in bringing similar awareness to their ULBs (Urban Local Bodies) and RLBs (Rural Local Bodies). This is because as explained by Asher and Aggarawal, who write that the ULBs and the RLBs will also be impacted by GST(https://www.myind.net/Home/viewArticle/indias-landmark-gst-reform-implications-for-the-states-ulbs-and-the-pris).
The importance of commercially sensible transition provisions should be recognized, and clarity regarding them need to be imparted to all the stakeholders, including the tax officials.
This reform has been on the public policy agenda for many years, but it is only in recent months that the sense of urgency about finding a political consensus to implement it has been exhibited. As a consequence, the GST is expected to be implemented from July 2017, or due to the Constitutional requirements, latest by September 2017. This is a short time to prepare the stakeholders who have widely varying capacities to be prepared for complying with the GST. The fact that even in mid-june 2017 there is uncertainty whether the GST will begin from July 2017 highlights the challenges in preparing the stakeholders for its implementation.
The challenge of preparing for the GST is made more acute because the relevant law has not been completely finalized. The rules, procedures, and regulations of the GST have not yet fully been explained. For example, rules relating to E-way Bills are not in place as yet. Also, the GST rule that are available are not set in stone, leaving a possibility of any last-minute deviation from the existing version. This has created lot of uncertainty in the minds of trade and professionals. A complete version of law at least 30 days before its implementation would have been a much better idea.
Implementing a law like the GST to all business transactions in a country like India is a difficult and demanding task, and a need will always be felt for supplementing the awareness and training efforts being made in this direction. It is clear that a clear draft of rules and procedures seems to be an essential pre-requisite for the smooth implementation of the law.
This column provides an overviewof select initiatives by the Indian tax
Authorities, by the Institute of Chartered Accountants of India (ICAI), and by Confederation of All India Traders (CAIT) in imparting training on the GST, and increating awareness among the stakeholders about India’s GST reform.
The MANTHAN Initiative of the Tax Authorities
The Union government has launched an outreach programme called ‘Manthan’ for creating awareness of the GST laws and implementing regulations. The outreach programme is aimed at explaining the new system, its benefits, registration and compliance, and transition provisions. Many programmes have already been conducted for educating taxpayers on legal and procedural aspects, as well as the compliance expected under GST. The program is also aimed at educating and training the tax officials at the Union and the State.
As on 2nd June 2017, 4015 workshops have already been conducted throughout the country. The geographical distribution of the workshops is provided in Figure 1.
It should however be emphasized that merely holding workshops is not necessarily an indicator of whether requisite training is being imparted. The Central Board of Excise & Customs (CBEC) is therefore strongly urged to analyse the extent to which the objectives of the workshops are being realized. In such workshops, including ways to alter the attitudes of tax officials should be an important part of achieving the GST’s objectives.
In order to be successful, workshops need to focus on the goals of the GST, and the deficiencies of the current tax collection system. Namely, the soft-skills component which is often given less than the requisite focus, is particularly essential.
Source: www.cbec.gov.in accessed on 02-06-2017
Apart from conducting workshops for educating and training people and officials, the awareness efforts of the Union Government have included the following:
As part of the publicity campaign, print advertisements have been taken out in almost 200 different newspapers both national media and in regional languages creating awareness about GST in major cities by use of rail train panels, bus queue shelters, bridge panels, billboards, and others means. This has been termed the ‘GST Outdoor Campaign’.
There is also special GST awareness campaign displayed through 12 Air India aircrafts. Advertisements on GST are being run on major TV and radio channels. The You-Tube channel named 'GST INDIA' contains major interviews and parliamentary discussions on GST. The social media campaign through Facebook and Twitter focus on dissemination of information on GST and clarifying queries on GST procedures and law.
The twitter handle of Revenue Secretary Dr. Hasmukh Adhia (@adhia03) and CBEC twitter accounts (namely @CBEC_tweet, and @askGST_GoI) are contributing to GST awareness campaign and addressing the concerns and queries of public.
As on May 31st 2017, more than fifty thousand State and Central government officials have been trained on the relevant laws and procedures pertaining to GST.
The Central Board of Excise & Customs is being renamed as the Central Board of Indirect Taxes & Customs (CBIC) to supervise the work of all its field teams implementing the GST, and to provide policy relevant inputs to the Government in policymaking in relation to GST.
Initiatives of the Institute of Chartered Accountants of India (ICAI)
The Institute of Chartered Accountants of India (ICAI) has been extensively supporting the government in creating awareness and undertaking the knowledge update exercises pertaining to GST. ICAI has been doing research on GST and has published several useful reports and studies to disseminate knowledge about GST practices and implications.
When the First Draft of the GST became public, the ICAI came out with Background Material on GST Acts(s) within one month, and after that with every Revised Draft and Final version of the Law, the ICAI has come out with publications of Background Material on GST Acts(s) and Draft Rule(s) and FAQs & MCQs on the GST for the benefit of Government, trade and industry, and professionals. Further, to support the government with smooth implementation of GST, the ICAI has regularly submitted its suggestions on draft GST Rules as well as GST Act(s) to the government, many of which have been considered in revising the law and the implementing regulations.
More than 1500 workshops, seminars and conferences on the GST covering more than 50,000 professionals and over 20 Interactive Programmes on the GST for trade associations have been organised by the ICAI across the country since January 2017.
ICAI has also launched a Certificate Course on the GST at more than 36 locations all over India for its members. To meet the massive demand, ICAI has also launched Virtual Classes for Certificate Courses on the GST through Live Telecasts Sessions at more than 40 locations across the country. They have set up GST ‘Sahayata’ desks at various branches across the country to help resolve the GST related issues relating to traders, industry, and public at large.
Initiatives of the Confederation of All India Traders (CAIT)
The CAIT has also launched national campaign — “Mission GST” — under which 5,000 officials of trade and commerce bodies from across the country are being trained in the GST to empower and educate the trading community about the GST across the country.
In addition, the trade associations such as the FICCI, CII, and even regional and sectoral trade organisations like organisations of Textile manufacturers, Jewellery trade, Builders and Developers are conducting seminars, workshops, and training program on the GST. Many trade bodies have made representations also to the Central and the State Governments expressing their specific concerns related to their industry which is being considered by the respective governments while finalising rules, regulations and procedures.
Wide ranging efforts by various national and regional bodies for helping trade, industry, and government officials to become GST ready are being made. Nevertheless, much more is still required to implement the GST successfully in a federal country with multi-speed economy across the States and regions. Varying levels of technological capacity to get accustomed to technology-intensive GST design and administration also makes this transition complicated.
There is also an urgent need to bring about a shift in the mind-set of the government tax officials towards facilitation and taxpayer service rather than narrowly construed compliance. Reorganization of tax administration, with stress on building needed skills rather than continuing with traditional approach to human resources will also be needed.
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