Technology, not people, led to GST disruption, says Hasmukh Adhia

The government understands the need for reducing GST slabs and rates, said Adhia

Technology failed the smooth transition to the goods and services tax (GST) regime, even as officers did a marvelous job, Finance Secretary Hasmukh Adhia said on Friday.

Talking to reporters on ‘one year journey of GST’ at industry chamber FICCI, Adhia clarified that he was not referring to the people in GST Network (GSTN), the technology backbone of the indirect tax system, but the technology per se.

“Since we had to meet a certain deadline, we needed to hurry up the process. Somewhere, I made a reference about the technology failing us, but that does not mean that the people in GSTN failed us. Marvellous people work at GSTN, and despite their efforts, the technology still failed us,” Adhia said.

He added that the government could intervene where human intervention was needed, but when it came to changes in technology, a small change required at least 8 weeks.

“If I asked for a small change in software, the technology team would ask for at least eight weeks. That was because making a single change in the software required many other incidental changes. It gave us a bit of a problem.”

Even though there are technical issues that need to be sorted out, the nation has come a long way since the implementation of the biggest tax reform India has seen.

“We gained a bit in the process of simplification by introducing GST, but that does not mean there is no scope to improve the existing system. We are still convinced we need to do a lot more,” he added.

Till recently, GSTN was a private body developing the front-end technological infrastructure with the help of Infosys. In the last meeting, the GST Council decided to convert it into a government-owned company in light of data security concerns.

Adhia also said the Council will consider bringing petroleum products under GST it could happen in phases.

Five petroleum products, diesel, petrol, crude oil, natural gas and aviation turbine fuel, are currently outside the purview of GST and states have the right to impose value-added tax on these items.

“One of the demands that is there before us, we will see... everything will happen in stages,” Adhia said.

Central Board of Indirect Taxes and Customs Chairman S Ramesh said although there is a demand for bringing petroleum products under GST, the GST Council will have to finalise modalities.

Finance ministry officials had indicated earlier that natural gas and ATF could be the first to come under GST, since it was easier to build consensus among states, compared to other petroleum products.

The government understands the need for reducing GST slabs and rates, but has to keep revenue consideration in mind.

“We are trying to make the refund process completely automatic. This is the next thing. In terms of simplification of rates and slabs, we do understand the need for it, but we did what was best in the given scenario,” he said.

The government is working on simplifying the return filing process, which is expected by early next year.

“We have done a lot but it does not mean there is no scope for improvement. We still believe we need to do a lot more and are working in that direction," Adhia said. GST has four broad slabs, 5 per cent, 12 per cent, 18 per cent and 28 per cent, and an additional cess on demerit and luxury items. The GST Council has reduced rates on over 250 items since the roll-out in July 1 last year.