Chaotic tax overhaul in India becoming bad news for truckers

Bloomberg

Trucking firms like Caravan Roadways Ltd., which has more than 500 brightly-painted vehicles crisscrossing India, were meant to see immediate benefits from
the biggest tax reform in India’s modern history.
But the chaotically-implemented goods and services tax is derailing the government’s revenue target and hasn’t much improved trade within Asia’s No. 3 economy.
“Suspicious states”—anxious to retain pre-GST earnings—are stepping up vigilance at their borders, according to Crisil Ltd., and there’s little in the legislation to deter officials seeking bribes.
“The people who were earlier on the check posts, who were getting money, they are getting the same through other means,” said
Rakesh Kaul, a vice-president at Caravan Roadways.
While some border posts were replaced by a system of supposedly-randomised checking, “right now, they’re not doing random checking, they’re checking every vehicle,” he said.
These developments are eroding the effectiveness of a tax that was supposed to erase internal borders and convert India into one of the world’s biggest single markets.
Although the GST is expected to widen India’s tax net over the medium-to-long-term, it has done short-term damage to the economy at a time when Prime Minister Narendra Modi needs to accelerate job creation.

Low Revenues
Launched July 1, 2017, the GST—despite numerous tweaks— has been such a headache for small businesses that it has prevented many from filing returns, leading to lower revenues. Collections dipped to $12.69 billion in November from 833 billion rupees in October and 921 billion rupees in September 2017.
Collections will get even worse, said two officials familiar with the issue. A substantial shortfall is expected in the budgetary target of 9.27 trillion rupees for indirect taxes, the officials said, asking not to be identified as they are not authorised to speak.
India’s 58 million small enterprises, which make up around 40 percent of the country’s GDP, are struggling with complex rules, a glitch-ridden IT backbone and onerous filing processes.