CA Satish Sarda
At every nook and corner of India GST has become the most hot topic for discussion. And the key issues in the discussion are : Will it come from 1st July? Will the things become costly or cheaper ? What about stock on 30th June ? Should I keep stock or sell out ? What about Input Tax Credit as on 30th June ? Can I get credit of GST paid in one state in another state ? What is the rate applicable on my products / services ? What infrastructure setup is required for compliance with GST ? Do I have to take registration under GST ? What is this E-way Bill ? What if some states do not pass the GST bill ? When will registration procedure for new registration will start ? etc.etc..!!! to put simply Confusions Galore !!!Even Twitter handle specially done for GST (@askGST_GoI) gives wrong, confusing answers to some of the questions put before it.
Why these question when we are already complying with so many indirect taxes such as Excise, Service Tax ,VAT etc . ? The reason being GST is the Mix-veg , it has taken different vegetables ( specially the non tastier one ) from all types of taxes , even from Income tax also. Secondly provisions are such complicated that even legal eagles are having different opinions , then you can understand the position of common man.
This is the tax reform everyone is waiting for. Government is also doing its best to roll out the biggest indirect tax reform. It is taking up huge awareness campaigns to educate the masses. But it is going to take time and it has to . GST is not just any other tax which can just be imposed and implemented. It is too big, too vast , too complicated to be implemented in a hurry. Its going to be a very healthy Mix-veg dish lest it is served well cooked . Half cooked GST will be a disastrous for the Government, Indian economy and taxpayers.
Why I anticipate that GST can not be cooked fully by 30th June,2017 ? The reason are following :
- Law still incomplete : Seven States yet to pass their GST bills. In case even if a single state fails to pass the bill by 30 June 2017 GST cannot be implemented PAN India in true sense. States like West Bengal , Kerala, TN have shown their reservations about many provisions in the GST and few of them are vocal about it too. Various Rules such as Advance Ruling , Appeals and Revision , Assessment Audit , E-Way Bill , Anti profiteering etc. are yet to be finalised.
- Administration issue is still pending
- Rates , exemptions are yet to be fully finalised
- Migration of existing assesses still pending , Migration sites not working smoothly , errors are coming , site gets stopped for maintenance or various other reasons.
- GST Suvidha Providers (GSPs ) are not ready with their software
- The Indian Banking Association a body that represents 237 banks has informed a parliamentary panel that their members were unprepared to implement the new indirect tax regime by 1st July,2017.
- A huge chunk of small traders , manufacturers, service providers who were hitherto not required to register will become liable for registration under GST for the first time. These persons will require proper hand handling and training.
If government really wants successful implementation of GST it should ensure following before declaring the rollout date :
- Once Complete Law ( Act,Rules,Formats,Guidelines ) and the supporting software is finalised , it should be kept in public domain for at least 3 months . So that all the stakeholders can understand the law properly , can take effective steps needed to comply with the law , strategise their business operations according to the law .
- The success of GST depends upon comprehensive , robust IT system and infrastructure.Nobody knows whether the system developed by government , GST Suvidha providers are working properly or not. It should have trial run before the appointed date. There is going to be massive transactions on the system ( may be in billions daily ) . Whether the system can handle it ? Otherwise whole business structure will collapse. The GSTN system ought to be complimented by accounting systems which are or will be used by taxpayers. At present there is not a single accounting software which can claim to be GST compliant.
Government can not expect that eighty lacs tax payers will learn it in last fifteen days so that they can comply with the fully electronic system.
- Some provisions such as Reverse Charge Mechanism , TDS,TCS , Place of Supply , GST on Advance payments needs to be revisited. Government in their over enthusiasm has complicated a simple law .
- Transition provisions needs to be explained properly and correctly. It should be free of ambiguities and the provisions should be practical and compliable.
- E-Way bill provisions need a complete overhaul or may be deferred for time being. It has put unnecessary fears in the mind of taxpayers . Also it is going to block the smooth flow of business and may install the inspector raj again.
- Government should carefully and seriously consider the representations received from various trade and professional bodies.
From various sources it has been informed that Government is also thinking of Changing the financial year from April – March to Calendar year. This is also a welcome move. But roll out of GST in July and again changing of financial year from January will entail huge administrative burden on taxpayers. Change in financial year will have many complication in accounting, taxation provisions etc . Tax payers will not be able to handle two huge challenges in a span of 6 months. So it will be better if both the big and welcome reforms are rolled out from 1st January 2018. All the stakeholders will get sufficient time to mould themselves in the new environment. We are sure government can take appropriate care of constitutional aspect.
Tax payers who are still to come out of the demonetisation shock , will not be able to handle the two more shocks in quick succession. Let the Government follow its own slogan “Sab ka Saath ,Sab Ka Vikas “..!!!
(Author is a Practicing Chartered Accountant and Past Chairman of Nagpur Branch Of ICAI and can be reached at email@example.com)