India’s ‘GST Chakravyuh’, Where ‘Ease of Doing Business’ Is Another Ponzi Scheme!
There is a peculiar story that can be told every day of India’s emergence as the worlds’ economic powerhouse in the streets and markets of the country. It is a story where terms like ‘ONE NATION ONE BUSINESS PLATFORM’ rings out loud as ‘just a word’ which carries the sound as efficient as ancient Veda mantras, but work as slow as a government office during any of the weekday offs.
This story is built around the administrations’ GST (Goods and Services Tax) registration procedure; a web of tiresome formalities where business ideas go through the trials of pending files.
What Is The GST Registration Riddle?
One would expect that getting a GST registration in India has more to it than having to fill in forms and wait for the registration process. Instead, it has become more of a fine art – it no longer simply requires that one be patient but that he or she be patient for months on end. A process which is optimistically advertised to be ‘online,’ looks strikingly similar to the conventional bureaucratic procedures but which are just digitised enough to give one a feeling that one is not dealing with the conventional bureaucratic methods.
Why It Is The Two Month Waiting Game?
One of the more interesting features illustrated in this system is how it is able to take what should be an easy registration and drag it out over the course of two entire months. In this period, those who want to become business owners are entertained to an unremitting lesson of administrative obfuscation, applications are turned down like clock-work and for reasons that would bewilder even the most lettered of civil servants.
Example- One of the silliest parts of this system is that of how it addresses e-commerce dreamers. Ironically, any entity, regardless of its turn over, is supposed to register for GST if it intends to sell through e-commerce platforms. Surprisingly, this policy requirement, which is supposed to guarantee compliance, hinders the tremendous number of small businesses that attempt to adopt digital commerce.
Why GST Registration Is A Multi-State Nightmare?
Trying to get multiple GST registrations in different states is almost as complex as trying to find your way out of a maze while being blindfolded. The procedure has been developed in such a way that the business owners will be able to go through the full range of bureaucratic inventions that are available in different states. It emerges that each state has its own understanding of what a “virtual place of business” means more often than not insisting on physical business premises where these may not be required.
The Other Side of Bureaucratic Style of Working
The actual price for such an administrative puzzle goes far beyond the mere irritation of businessmen and businesswomen. It manifests in:
Lost Revenue- While tax officials are quick at sifting through applications with obsessive concern for pertinent information, the country leaves billions of uncollected taxes from businesses locked in limbo. The fact that a tax registration process is inhibiting tax collection should be funny if only it was not crippling the economy.
Innovation Paralysis- When competitors in the global market can set up their business in hours, Indian businessmen have to justify to their customers why they themselves cannot create GST invoices for weeks or even months. It does not affect individual companies solely; it generates a systematic drag on a country’s innovative capital.
The Corruption Tax- What may be even worse about this system is that there is an implied expectation of what has been more tactfully called ‘fast-track consideration’. The irregularity is such that the corrupt practices are actually part of the fee structure, to the extent that bureaucratic officiousness has made the illicit “grease palm” fees as legitimate as any fee listed on the application form.
The Global Context: A Study in Contrasts
This makes the Indian GST registration all the more ridiculous when put under the global lens and bench marred. In the United Kingdom for example, it only takes a shorter time than a cricket match to incorporate the company into a position to receive the tax registration. The entire process is genuinely online with no physical interface requirement and no ‘additional documents’ which one always hears about in Indian applications.
What India Needs Is The Reform Mirage
Lore and legend, occasional calls for reforms and introducing new digital technologies are illusions in a desert, the hopes they trigger are momentary only. Instead, they are mostly more of the same where reforming governance means only digitising traditional bureaucratic processes. This leads to a design approach in which a digital interface is flaunted yet the physical analogue remains firmly intact.
Several obvious solutions have been proposed:
- New business venture automated provisional registrations.
- A time-bound processing with an accountability measure is the second strategic approach towards enhancing organisational risk management.
- It also has ease of multi-state registration processes
- Real sites for online verification
But these solutions just remain in the same bureaucratic system that was meant to be reduced.
The untold issue for every single GST registration is – business owners seeing their cash reserves deplete, startup owners losing out on new customer opportunities, small business owners keeping up with clients who are increasingly growing more and more impatient. Such stories never hit the news but together constitute a huge loss for the country, in terms of opportunity cost.
The Path Forward
For India’s GST registration system to truly support business growth, several fundamental changes are needed:
Immediate Reforms Required:
- Characteristics of new true live automatic approvals for basic registrations
- Regarding the requirements that are classified on the basis of the states, it is possible to state that there are too many similarities in their requirements.
- Hence, distinctive reassagements in admission of digital business models have been prompted.
- Simplification of necessary physical checks
- The establishment of efficiency measures for officers
Long-term Structural Changes:
- Inception of a fresh new registration process which is entirely innovative.
- Application of new models of business into legal provisions
- Implementation of risk-based approval protocols
- Provision of a single window clearance for multi-state operations.
The Bottom Line: Beyond the Slogan
An aesthetic of India’s “ease of doing business” has emerged, which is so far from the actual experience that no amount of lip-service can change that distant reality. The case of GST registration puts into perspective how the procedure that is meant to enable business activity starts to serve to cordon off territory across agencies and become a fortification against real economic activity.
Until this problem is solved, the Indian dream will remain an empty speech for the young people who want to start their own businesses but are offered the Internet on one hand and red tape on the other. Our economic future continues to hang in the balance — though not for want of trying, or for lack of an enterprising culture — but for a system that puts the essence of that spirit through something approaching a trial.
The question that comes out is whether the Indian structure is capable of shedding the colonial model to drive India’s economic prosperity. Until then, any comment of the ‘ease of doing business’ will be confined to what it is today – a ponzi scheme of political catchphrase.
