GST how to make it more effective?

It is now more than 6 years since i have been hearing about introduction of GST nationwide and now the latest date set is 2016. Good lets have it, it could rationalise the taxation system in our country and bring down many systemic deficiencies in tax collection.

Today we have goods moving in various modes of transport (Bus, Truck, Rail, air, sea and even private transport) and lot of it going without any kind of check for reasons best known to the authorities.

I believe there could be a simple process for this whole movement of goods and reduce corruption. It is multi pronged and could work.

When a manufacturer prepares an invoice, he includes the information like, buyers name, address, tax registration details (TIN No) and his invoice also carries his own information in addition to the goods that are being transported vide that invoice. As soon as all this info is fed in a centralised GST website, a unique Bar /QR code will get generated. This code will be readable by the machines deployed with taxation authorities.

This code will be printable on any white paper/sticker paper. When these goods are loaded into a transporting vehicle, which ever mode it may be, that particular vehicle operator in turn will generate a unique code from the same website, which will have a section for the transporters. That means the consignment carrier will be having a Bar/QR code which will have the total information of the goods being carried in that vehicle as recorded in the central server of the GOI.

As the vehicle passes through the borders of any state, driver/cleaner will have to walk up to a kiosk where a reader machine will be installed and he has to just pass this bar/QR code under that reader and he will simply get a pass printed out by the machine attached to that reader (just like a ATM receipt). Machine in turn would have recorded the goods movement at that particular state border in the central GST server. As long as the goods destined for a destination (Ex: Origin of goods is Punjab and destination is Kerala, all state check posts where these goods are supposed to pass through will record the movement of the same) this info in turn gets recorded in the central GST server. The goods movement can also be observed by the transport owner by accessing the central website, which will give him the time stamp of where the last check in of his vehicle was.

Just to ensure there is no illegal movement of goods, there could be officers equipped with the bar/QR code reading machines and they will have to just scan the code that is being carried by the transporter and verify the border passes that were printed by the respective border check post. This is just to ensure compliance.

On receipt of the goods by the intended recipient, he has to simply get the code read by the machine installed in his place, the invoice through which he has received the goods. Goods movement will get recorded by the central GST server as received by the buyer. He in turn as and when sells the goods will be following the similar process.

Every goods transporter will have to follow these steps and ensure they record which goods they are carrying irrespective whether they are allowed to transport goods legally, including private transport. Let private transport be levied a fee for this purpose to avoid harassment by the cops/RTA for illegal carriage of goods, this can again be through this central system.

Once the goods reach the state through its border check post and has been received by the buyer, state servers will get notified of the arrival of the goods in that state, thereafter it becomes the responsibility of the state to ensure further taxes on that goods are recovered within that state. In case these goods further move out of this state, similar procedure would be adopted.

When every transaction is recorded, on the central server and is accessed by concerned, to the extent they are allowed to access, then the transparency will be very high. It has to be mandatory for every trader, manufacturer, since they are accessing the central server, it could be either from their own internet connection or from a public internet (in case they cant afford to have their own computer)

This entire process will eliminate goods purchased for personal consumption only. Since all invoices and goods carrier will be carrying a unique code generated by the central server, when the intermediary checking officers scan the document their own reader will give them info on where the goods are being transported to and if there is any irregularities, they can immediately cease the consignment/vehicle until required proof of genuinity is provided. In case goods have been taken out without proper generation of Bar/QR code, then the seller/sender will be fined heavily. This will ensure better compliance.

Since all goods that are manufactured and transported have been recorded, then it is the job of tax officials to ensure proper remittance of tax is made. The need for integrated check posts and massive goods scanning installations can be avoided. All the officials required for these places can be usefully deployed in tax collection.

There is going to be an area of concern for individuals who will be sending their household / used goods etc., through transport vehicles either on transfer of residence or for their near and dear ones. Even these people will be asked to enter their Aadhar number and the details of the material sent in the central server and they in turn will be provided with a Bar/QR code and they have to hand over the same to the transporter who will be carrying the goods to the destination.

Certain other fringe benefits, Drug/Food manufacturers can be asked to add batch numbers in the invoice, which will carry the info on expiry etc., since all the info is machine readable, it will ensure stricter compliance on goods that have expired etc. Also weight of the consignment also can be added as part of the invoicing, when a transporter will start adding all these parcels for his movement, the server will immediately reject any overloading, that way ensuring the goods transporters don’t overload their vehicles. In case any goods which are supposed to be delivered in a state are not delivered and carried to the next state, the transporter in turn will be penalised heavily.

Over a period these code reading system can be improvised to read from a moving vehicle with scanners installed in strategic places or much better in the toll plazas. This will even eliminate the need for a person to get down and go to the machine to get the Bar/QR code read.

As our prime minister says, it is important we trust our sellers to provide the accurate info and if they are found to be erring, penalise them heavily, and if required cancel their licenses to carry on business.