Why delay fixing GST? Not being able to simplify returns even now unfortunate
March, 13th 2018
Nine months into the Goods and Service Tax (GST), the process of filing returns hasn’t been made any simpler. This is surprising as the revenue department has been working overtime to resolve the issue, given that it is the key to the success of the GST.
Nine months into the Goods and Service Tax (GST), the process of filing returns hasn’t been made any simpler. This is surprising as the revenue department has been working overtime to resolve the issue, given that it is the key to the success of the GST. While the Group of Ministers (IT) was to have studied the problem and come up with a solution—this was decided on January 18—this hasn’t happened. Consequently, the GST Council has been compelled to ask taxpayers to continue with the current process for another three months till June 30. That means taxpayers would need to file both the GSTR3B—summary details of the sales and the input tax credit claims made—and also the GSTR 1, which is, in effect, the sales invoice. It is somewhat mystifying that a simpler solution hasn’t been found. While Infosys had suggested a new process, the GST Council found it wasn’t really foolproof; effectively, it would allow the buyer to claim the input tax credit (ITC) and receive without the seller actually having paid the tax. That is clearly not desirable and would leave the government vulnerable to fraud; as experts point out, the ITC cannot be reimbursed till the invoices of the buyer and seller are matched.
Hopefully, the GoM(IT) will have a solution soon—allowing ITC only after the tax has been paid is an obvious one. It’s also disappointing the GST Council was also not able to take a decision on implementing the Reverse Charge Mechanism (RCM); again, a simple set of processes for filing returns needs to be found, but for some reason is eluding the Council. This is important to convince buyers to take on the responsibility of depositing the tax collected by them on behalf of unregistered suppliers. If the process is onerous, buyers will simply not source inputs from unregistered producers. It’s important the RCM is introduced for assessees who have opted for the composition scheme. This is because the government has found the evasion from this group to be very high; data, for the period July-September 2017, showed assessees had reported an average annual revenue of just `8 lakh, which was even below the GST threshold of `20 lakh. While the Council was able to schedule the rollout of the inter-state EWay Bill from April 1, the success of the scheme will depend on how robust the portal is. The rollout has been delayed because the site crashed the last time around; while the government believes the mechanism to track the movement of cargo would yield an additional `10,000 crore in revenue, it is important there is no harassment.