The recent reduction in GST rates has been widely welcomed across all sectors. The Government has significantly reduced tax rates on various consumer goods, which will certainly benefit a large section of the population. However, certain complexities continue to remain, particularly in relation to claims and the impact on input tax credit.
What prompted me to write this is the manner in which the rate reduction is being projected as a large-scale “tax reform.” In my 30 years of tax practice, I can confidently state that while this move indeed provides tangible relief to the public, to call it a “reform” is misplaced. At best, it can be described as a relief measure aimed at easing the burden on consumers, not as a structural reform of the tax system.
Lawyers, trade associations, and industry bodies have long been demanding genuine reforms in the GST framework, many of which still remain unaddressed. One of the major hurdles faced by assesses is the stringent limitation for filing appeals. Under the GST Act, the adjudicating and appellate authorities are powerless to condone a delay beyond 30 days after the prescribed period. This provision has left many genuine taxpayers remediless, even in deserving cases, where a small lapse of time has resulted in denial of justice.
Another example is the restricted time limit for rectification of mistakes. Under the GST Act, rectification can only be sought within 3 months, whereas under most State VAT laws, such rectification was permissible for up to three years. This unreasonably short window creates undue hardship for both taxpayers and authorities in correcting genuine errors. No matter how gladly government officials pet their back taxpayers genuinely deserve some real measures of relief in the GST Law. Movement of goods is another area where reform and pragmatic approach is highly needed despite a series of judgments of various high courts, state authorities are intercepting goods and vehicles on technical errors. It was promised by Hon’ble Prime Minister that the seamless movement of the goods and minimise the travel duration will be the most important feature of the new law which is completely missing.
The reduction in GST rates is certainly a welcome step and will provide short-term relief to consumers. However, for the GST regime to truly evolve into a fair, robust, and taxpayer-friendly system, the Government must address structural issues such as appeal limitations, rectification timelines, and other procedural bottlenecks. Only then can one truly speak of “reform” in its real sense.
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