The problems with the GST system can be seen more vividly with nearly 2 years of data to back up. The disappointment on GST was visible when the tax collections for September dropped to Rs.91,000 crore. In the last 2 years of its existence, GST has not been able to sustain above Rs.1 trillion mark. Even at that level, it would be nearly 15% below its budget targets. Here is how the FM can go about rethinking the GST basics.

· It is time to make the process of on-boarding simpler. To make the GST effective, the process of on-boarding businesses has to be made simpler. Currently, the time to register and the documentation needed are too stringent.

· When an entrepreneur is willing to voluntarily register and pay the GST, they should be allowed to do so purely on the basis of their PAN card. Once this issue is resolved, the numbers of new GST payers will automatically rise and add to the GST kitty.

· The government should seriously look at adopting the TDS (tax deduction at source) approach. Income tax is simple because the process flow is more efficient. Today vendor bills the GST to the client and then has to file returns after depositing the GST with the government. Instead, all businesses having turnover up to Rs.5 crore should be exempted from all compliance except an annual return filing. Clients of these companies can deduct GST and deposit with the government.

· Rates of GST need to be rationalized. Firstly, reduce the number of slabs, sub-slabs and rates to the bare minimum. Ideally, if GST has to be effective, it is best to stick to just two slabs; merit and non-merit.

· It does not make sense charging 28% GST on cars because they are anything but non-merit products. Also, there are multiple slabs like the 0% slab and on top of that there are slabs like 2%, 3%, 5%, 12%, 18% and 28%. This is as complicated as the old system.

· It is one thing to get more tax payers and expand the list or tweak the rates. It is more important to tweak the rules in such a way that it encourages compliance by choice rather than by force. Any tax system that is too complex, becomes hard to monitor.

· What the government can do is to shift all businesses with turnover up to Rs.5 crore to the TDS mode with just one annual return. This also addresses the working capital issue for vendors and makes any tax credit seamless.

· Lastly, the GST has been implemented on an all-India basis but infrastructure to track, monitor and follow up is just not there. Instead, apply indirect pressure by making proof of GST mandatory for everything from business loans to overdraft facilities to any business empanelment.

A few small tweaks are all that is required to give a boost to GST collections.