The EY GST book makes recommendations for policy changes based on four criteria: increased tax income, improved dispute resolution, empowered institutions, and a more convenient environment where you can conduct business. According to a new book on Goods and Services Tax (GST) published by EY, which offered sector-specific recommendations on indirect tax changes, expanding the scope of GST to include petroleum goods, power, and real estate will make India’s manufacturing sector more competitive. Let us understand the recommendations for GST as per EY.
EY Launches the Book on GST Transformation
EY has published a book titled GST Transformation: The Road Ahead to recognise the historic development of GST and to outline a path forward for making the system more user-friendly and adaptable to the demands of businesses and the government. This book delves into the many methods that have been proposed to improve the effectiveness of GST law and procedures.
As per the book, India has the potential to become a major manufacturing economy by 2025–2026 if the Goods and Services Tax (GST) is implemented well, increasing productivity and decreasing prices for enterprises.
Aim of the Book Launched by EY
According to the announcement, which quotes Sudhir Kapadia, Partner, Tax & Regulatory Services, EY India, the book is an attempt to encapsulate the rewards and difficulties of the monumental journey of GST, as well as to incorporate essential input and recommendations from all major players of this tax reform.
This reform has now been in place for five years, thus the statement quoted Kapadia as saying that it is time to look forward and make the decisions needed to streamline and rationalize the tax rate system, the process of claiming input tax credits, and the inclusion of the other goods or services in GST.
Recommendations by EY on Various Sectors
EY Recommends reduction in GST Rates on Batteries
Since batteries account for about 40% of the total cost of electric vehicles (EVs), EY recommends reconsidering the GST rate on batteries (recommending a lower rate of 5% instead of 18%) to make EV usage more cheap and economically viable and therefore increase both demand for and supply of EVs. Learn more about EVs Taxation and business at:
- GST on Electric Vehicles
- How to start EV charging station business plan in India?
- Electric vehicles are exempted from RC Fees -Registration Certificate Fees
Recommendations on easing the GST Registration Requirements
The book recommends easing GST Registration Requirements to make it more appealing to micro, small, and medium-sized enterprises (MSMEs). A more permissive composition system under GST, easier streamlining of tax credits, and the elimination of tax cascading can all be achieved by permitting input tax credit to the level of output tax payable. You can understand about GST Registration or GST Return Filing through our detailed guides at:
You can also contact our GST Experts at: 8881-069-069.
GST Rate Recommendations on Mobile Phones and Online Gaming
A GST rate of 5% or, at most, 12% on mobile phones and their components would be consistent with governmental incentives to encourage mobile phone production in India. Pre-GST period tax rates on mobile phones are also noteworthy. EY recommends creating a new service entry for “Online Skill-Based Games” with a rate of 18% that applies solely to the platform fees/fees collected for the services provided by the operators and service providers and not to the prize pool contribution made by the respective users in order to clarify the tax treatment of online skill-based gaming. Read more: GST on Mobile Phones & Mobile Accessories and GST on online gaming sector.
Guidelines on Taxation of Virtual Digital Assets
While there has been no announcement of taxation of Virtual Digital Assets (VDAs), such as the cryptocurrency industry, under GST, the book argues that clarity on non-taxability under the current GST law, as well as the forward-thinking framing of strict guidelines that are aligned with emerging international best practises, is a pressing necessity. Understand about it in detail at: Gst on cryptocurrency in India.
Recommendations on Petroleum products, electricity, real estate be included under GST
In order to increase the competitiveness of Indian industry, the GST should be expanded as soon as possible to include petroleum products, especially ATF and natural gas to start, (ii) electricity, and (iii) real estate. The country would benefit greatly by taxing electricity at 5% across the board, petroleum goods at 28%, and real estate (land and completed buildings) at 12%, all with simple credit eligibility. You can learn more about it at: GST on fuel: A price vs revenue trade-off.
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