What are the current roadblocks to GST?

roadblocks to gst

roadblocks to gst

It has been more than two weeks since the goods and services tax (GST) has been rolled out and yet people from all sectors of the economy are facing teething problems day in and day out. Right now, confusion over customs norms has meant that exports that are worth millions of dollars are lying in the factories. The government has attempted to come forward and tried to resolve the issues. It has already issued some clarifications but exporters are still saying that they are unable to understand some things. The government has already analysed the situation and is expected to come up with more clarifications on the issue.

Moving things along

It is expected that this will hopefully get things moving. The Director-General of Federation of Indian Export Organisations (FIEO), Ajay Sahai, has stated that goods are right now stuck within the factories’ gates. Exporters are mostly concerned with the process of claiming credit for input taxes paid and the documents that they have to provide in order to procure the same. They are also worried about how they would use the input tax credit in order to pay the integrated GST (IGST) that exports are being levied with. As of now, exporters need to provide a letter of undertaking (LUT) or bond so that custom officials release their export consignments.

Liquidity crunch

Apart from stopped business, exporters are complaining of critical issues such as liquidity crunch, delays in early returns for exports, and overall problems in working owing to GST. The liquidity issues are happening because the present system makes it necessary to first pay the GST and then claim the refunds. This has also meant that working capital has been blocked. Exporters have already asked for a mechanism whereby they are granted exemptions from the present system. Ganesh Kumar Gupta, President of FIEO, has already sought the help of Nirmala Sitharaman, the Union Commerce and Industry Minister, in sorting out the issue.

Issues for small merchants and e-commerce companies

GST has also caused some major problems for the smaller merchants and the e-commerce companies that they are working with. When it came into effect from July 1 it was said to be the biggest tax reform in India following independence. It was supposed to institute a central tax in place of hundreds of federal and regional levies. However, retailers have understood to their dismay that it is anything but simple. Their biggest areas of worry are the mind-numbing volume of product classifications and documentation.

Popular backlash

Apart from business entities, the common people too are highly confused about the tariff on goods after GST and shop owners are at pain to explain the taxes being charged under GST rules to each and every customer. The government is being blamed by the people for having created confusion and by shop owners for the problems that they are facing in their daily transactions. Arun Jaitley had already launched an app a week back that helped people find GST rates for various products and services but evidently it has not been that helpful.

Read More About  GST

What is GST?
How to register for GST?
Various Goods and Services Tax forms
GST Rule Changes
Implementation of the GST in India
Costlier Or Cheaper Under GST?
Revised GST Rate List
Different GST Return Forms