EASE OF DOING BUSINESS IN GST

INTRODUCTION
The greatest changes the Indian economy has faced in the last few decades are the
demonetisation of Rs 500 and Rs 1,000 currency notes and the introduction of the GST.
Economists believe that these two steps, amplifying each others effects, will be a game-
changing decision. Demonetisation has been extensively discussed and debated upon, so most of
us might be aware of its implications. However, GST is still an uncharted territory.
Taxation is the basic source of revenue for the government of any country. These taxes can be
classified into two types
Direct Tax
Indirect Taxes.

BURDEN OF DIRECT AND INDIRECT TAXES

Direct tax, i.e. income tax, is a tax that is levied by the government to be paid by every person or
institution in the country, subject to some exemptions. It is paid out of and in proportion to the
income of the person or institution. Indirect taxes are levied by the government on goods or
services. The suppliers of goods and services are liable to pay taxes on such supplies but they are
recovered from the next person in the supply chain.
So, in fact, the burden of such taxes is borne by the ultimate consumers. They are paid by every
person consuming such goods irrespective of their incomes. They are not directly paid to the
government by the consumers, but collected by the suppliers of such goods or services from their
customers (consumers) and subsequently paid to the government.
There are many indirect taxes in India, namely service tax, excise duty and customs duty levied
by the Central Government and Value Added Tax (VAT) levied by the respective state
governments.
You might remember that while eating at a restaurant, you eventually pay a little more than the
prices you see on the menu. That is because of a little asterisk leading to the terms & conditions
that say, Taxes extra.

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GST: One Nation, One Tax

The introduction of GST is a single move unifying all the indirect taxes. From the day GST
becomes applicable; all other indirect taxes will be abolished. Since our government has a
federal structure, three types of GST will be levied
Central GST (CGST)
State GST (SGST)
Integrated GST (IGST).

GST will ensure the free flow of credits throughout the supply chain as the credit of IGST can be
utilised against CGST, SGST and IGST and vice versa. The only restriction in the utilisation of
credit is that CGST cannot be utilized against SGST and SGST against CGST. However, this
does not pose a problem as both CGST and SGST are applicable on the same transactions. So the
CGST and SGST credits can be utilised against their respective output liabilities. This is the main
reason why GST has been proposed to be introduced in the economy.

Economists predict that due to reduced compliances, free flow of credits and increased ease of
doing business, the GDP growth rate can increase by a factor of up to 2 percent. Also, many
MNCs which were reluctant to invest in India due to all these issues will now be encouraged.
Now when you hear about GST in the news, youll be able to appreciate all the effort that is
being put in for making it a reality and youll understand what its consequences will be.

Analysis on ease of doing business under GST

No multiple taxes by states and center as only one indirect tax will prevail. Previously
multiple taxes at a different level would lead to different tax departments. Different tax
departments give way for different inspectors. Multiple assessments, different tax payment
dates but in GST 1 tax, 1 department, 1 assessment and single date of payment of tax are the
biggest ease in doing business. Gst saves time, cost, money going in corruption, improves
productivity provides convenience, with the time saved here an entrepreneur may get time to
manage its business in a better way and will get time to expand his business.

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 GST will show a huge impact on the cost of logistics to as a truck which goes from Mumbai
to Calcutta has to go through 6 to 8 states which mean 6 to 8 different gate passes and tax on
every state border, under GST the truck will not stop on the state borders saving time and
money.
GST will reduce the cascading effect as under indirect tax, in the present situation there are
multiple taxes in different stages, which turn into a tax on tax. This will help in reduction of
the cost of the product consumer has to pay.
Under GST there would be uniformity in taxes imposed by different taxes. In the current
scenario, different states impose a different rate of tax. With GST there would be a common
tax transforming the whole country into a common market where products manufactured in
Maharashtra will be taxed equally to products manufactured in Nagaland. Place of doing
business will have no significance under GST regime due to uniform tax rates.
Exemption list will reduce with the rise of GST making the umbrella of tax much wider so
that number of taxpayers may be increased. When taxpayers will increase the burden on the
current taxpayers will reduce with a reduction in the rate of taxes.
Tax collection will also improve under the GST regime. There would be better control over
on leakage.
Under GST regime, there would be an easy compliance registration payment returns will be
convenient as every process would be online reducing the ill effects of middlemen and less
corruption would be there with the online procedure.
Current tax regime has no time limit to resolve a litigation but under GST, a time bound
litigation process would be there and will reduce the carry forward of past litigation.
A current advance ruling or the advance tax is applicable to only selective categories but
under GST this facility would be provided to every registered tax payer.
With the benefits of GST in ease of doing business, some of the defects of indirect tax have
come along that is the missing trader problem where the government has refused to take the
burden of the missing trader and is now to be paid by the traders available in the cycle. The
credit of the CGST and SGST cannot be mixed as if a person has to pay the SGST and he has
credits in CGST he cannot use the credits in CGST to pay off the liability in SGST. The third
biggest issue is the 5 different rates of tax i.e. for luxury products different tax, necessary
products different tax. As the soul of GST is a single rate of tax whereas in India a 5 rate GST
is to be brought, this might not help in ease of doing business.

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CONCLUSION

GST will change the whole structure and the system by which business India is done. A number
of benefits with GST combined with the system of land acquisition act, bankruptcy and
insolvency code are the steps by the government which will make the business process more
easy which would generate a huge amount of foreign investment. As with the right
implementation of these policies India can even become a manufacturing hub with the support
from the government. Ease of doing business is the biggest advantage which the investors look in
a country. whereas in the current situation India ranks 139 out of 13 countries in ease of doing
business. With the right laws, the government aims at securing a rank in top 50 countries which
are not an impossible task. In the starting phase, there would be some friction but we need to be
patient for the future advantage of the GST.

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