India’s new tax system hit by severe teething pains – 27 Aug 2017

  • Millions of Indian businesses have not paid their tax for Jul 17 as the country’s new system struggles to cope with the weight of demand from companies trying to use it for the first time. Taxpayers have reported a range of problems with the online platform for the country’s national GST, including poor connectivity, insufficient space to file invoices and payments not being registered. The complaints are the latest set of teething problems with the system, which was rolled out in Jul 17 after a decade of political debate but with just three months of detailed planning. It has replaced local levies and taxes, turning India into a single market for the first time.
  • GST is an important part of Prime Minister Narendra Modi’s promise to modernise India’s economy, but critics say the rush to implement it has led to unnecessary complexity in the rules and weaknesses in the IT platform underpinning it. They warn that the early problems with the new system risk undermining confidence in Mr Modi’s entire economic platform.
  • By 23 Aug 17, the GST Network, which runs the online platform, said 2 million people had made their payments. Reports in local media suggested that by the end of the 25 Aug 17 payment deadline, that had risen by a further 1 million. Accountants reported that fewer than half of their clients had been able to complete their payments.
  • Businesses were due to make their first GST payments by midnight on 25 Aug 17, but that deadline had already been postponed twice. A week earlier, ministers had pushed it back at the last moment after the online platform crashed under a sudden last-minute rush. Even by the end of last week, important parts of the system had not yet been completed, including the digital interface that would have allowed companies to use their own software to access the online payments system.

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