CA Sudhir Halakhandi
My Good wishes on the third anniversary of GST .
Today is 1st. July 2020 and now 3 years have been passed since introduction of Goods and Service Tax in India. Now the time has come when we should analyse the performance of GST in our country. I have written so many times that since GST was a big reform so initial problems are inevitable but i must reiterate here that if problems are increasing day by day even after 3 years then the lawmakers should be alarmed to take remedial actions fast.
The back to back returns, confusing and complicated procedures faulty technical and IT system , continuous Notifications and clarifications, problems attached with ITC, lack of clarity in law on vital points are some of the grey areas required immediate attention to make GST a Good and simple Tax.
I have with me some of the eminent professionals who are involved with the GST since inception of concept of GST in India to give their opinion on 3 years of GST in our country. All these professionals are involved in spreading the knowledge of GST amongst Tax professionals and Tax payers through various seminars, webinars, Social media specially YouTube and Twitter.
My salute to all of them on GST day for their dedication, hard work and immense knowledge. The YouTube channel connected with these professionals is also given with their Name and opinion on GST.
My good wishes to all of you and Happy GST and CA Day.
Note: – The sequence of presentation is in alphabetical order arranged as per the first name of the respective professional.
GST-The unfinished project
“It is very unfair on the part of the respondents, in these circumstances, to expect that the taxpayers should have been fully geared to deal with the new system on day-one, when they themselves were completely ill-prepared, which led to creation of a complete mess. The respondents cannot adopt different standards – one for themselves, and another for the taxpayers.-Brand Equity Treaties Ltd. v. Union of India  116 taxmann.com 415 (Delhi). The above observations by Hon’ble Delhi High Court sum up mood of Taxpayers in the Country and while GST was launched with much Fanfare on 1st July 2017, it was projected as ideal taxation system.
Three Years down the line, GST is yet to fulfil dreams of all stakeholders for the benefit of whom it was implemented. Taxpayers are feeling the heat of increased compliance with burden of late fees and multiplicity of returns falling on them, States and the Centre are feeling the heat with lowering of revenue and citizens haven’t seen a major relief in lowering of the prices of goods or services port GST Regime.
Not that it has not resulted in improvement in any areas. There have been some improvements in areas like early disposal of refund, Multiple Taxes being subsumed into one, unified e-way Bill Mechanism. But then a lot is left to be desired.
So, what’s the next thing we do? Time has come for people to sit down, take a fresh look upon the legal framework and more so on the technical framework and chalk out a plan which makes GST and its compliance simple and easily accessible to all. We can’t have a system wherein simplification is judged from filing of Nil Return through SMS. We need to have a robust system which is simple and easily accessible to all. GST is here to stay and its upto us to decide, how it would stay. We can’t go back to pre-GST Regime and nor we have to. It’s the faulty implementation which is hurting the most and not the concept. One can’t hide behind the concept and shed their responsibility even after three years for lack of Infrastructure.
GST was introduced with a view to resolve many issues prevalent in the erstwhile regime and the most important issue was the cascading effect and the input tax credit. Government framed the law and implemented the same from 1st July but it seemed to be half hearted approach.
Government planned that the removal of cascading effect, seamless flow of credit and auto matching of invoices will be the highlight of GST. But somehow it failed in all the three. Cascading is still there, Seamless flow of credit is missing in many ways and matching has still not been started even after completion of 3 years of implementation.
Government failed miserably in:-
(i) Developing the Common Portal as per requirement and plan.
(ii) Training the officers and making them understand the law and its purpose
(iii) Creating a good sysnergy between Centre and State.
(iv) Frequent changes have made it more difficult and challenging.
(v) Absolute failure so far as providing machinery such as smooth portal, appellate tribunal, etc.
One thing which is certainly true above all is, this law is one of the best reforms of indirect taxation since independence. Initial glitches were and still are there but still can be resolved and things could be better.
Looking forward i would wish to see a settled law, smooth portal and trained tax officials. GST certainly is going to be game changer in the years to come and this law will open up many opportunities for the country and will certainly be helpful to boost the economy.
Hoping for the best and looking forward for a flawless GST in the coming future.
GST – Burning issues for trade and the way forward
We are going to complete 3 years since the advent of GST regime in India, which was initially identified as a game changing taxation reform intended to provide clarity of tax policies, ease of doing business and simplicity to the taxpayers. However, the reality has been completely different to say the fact that there have been plenty of implementation issues &common portal issues faced by many taxpayers. GST was introduced in India after a lot of deliberation with the relevant stakeholders and envisaged to reform the entire taxation system by bringing in electronic return filing, easier refund processing and less hardship in tax compliance.
The Act was well intentioned in provisioning for a robust & efficient return system wherein the supplier will file the return and the recipient will be able to do credit matching whenever he logins into the portal and avail credit likewise. It was also dreamt that with the new GST regime there will be seamless flow of credit from the supplier to the recipient and the problems faced in availment of input tax credit in the previous CENVAT regime will end however, that was not the case either.
The situation right now is the complete opposite given the fact that the GST regime still carries the smell of its former laws in providing for exemptions and negative list of blocked credits etc. It is a given that the implementation of new laws in a multifaceted country like India is a tedious task in itself due to the various socio-economic dimensions of its populace. Demonetization in 2016 & GST implementation right after in 2017 have indeed resulted in a period of hardships faced by the taxpayers. Hence the implementation has been all but difficult seeing how a major share of the taxpayers was not tech-savvy.
Nonetheless, the new regime has still satisfied many of our hopes by reducing the effects of double taxation which were present in the previous regimes, rationalization of rates and tax structures for the consumers, along with the extinction of multiple individual state taxation laws which has led to faster movement of goods across the country benefitting the taxpayers.
However, many issues still plague the system and the only way is forward hence we will have to work in order to make GST a “Good and Simple Tax” as conveyed by our Hon’ble Prime Minister Shri Narendra Modi Ji.
Celebrating 3 years of GST
Today, on the 3rd anniversary of the GST law, the responsiveness of the GST Council must be appreciated towards various issues being faced by the taxpayers on the procedural as well as the statutory sides. This explains the receptiveness of the GST Council and the tax administration by issuing more than 500 notifications & circulars not including those issued under SGST Acts along with the 40 GST Council meetings till date. Also, the way the notifications & clarifications are coming up considering the Covid-19 pandemic & relief to taxpayers is remarkable.
Going forward it is requested & expected out of the GST Council that the they must keep an eye over the advance rulings pronounced by the Authorities for Advance Rulings, reason being the kind of absurd rulings which being ordered these days results into chaos in the industries (for example: rulings in case of ID Fresh Foods pvt. ltd. (roti protha controversy), Clay Craft Pvt. Ltd. (director remuneration controversy) etc.).
Further, the new return filing mechanism must be implemented soon in order to put in place a perfect matching mechanism wherein both the recipient & the supplier make the compliances in a timely fashion & the credit starts flows seamlessly. Also, the Government must ensure the timely disbursement of the GST refund to ensure the minimal hindrances & complexities resulting into better working capital flow in the industry.
GST – The Biggest Tax Reform!
GST started with beautiful concept and was indeed supposed to play role of catalyst for all business segments. However, underlying thoughts of GST got diluted with the time it moved ahead for its actual implementation.
The brief comments on major stated objectives are as under:
1. Ease of doing business: GST made business easy to some extent for large and multilocational business, due to subsuming of many different taxes in its ambit. But for SME segment, apart from lack of clarity in law, it brought huge compliance burden, due to which it was tough experience for all small and medium players.
2. Increase in Tax Collection: At the inception of GST, it was envisaged that due to implementation of GST only, there will be 2% increase in GDP, and tax collections of the government will grow. We need not to mention the fate of GDP after implementation of GST. Even at no point of time government has achieved tax revenue as expected and states are continuously struggling for their share as committed.
3. Seamless flow of credit: From the start of GST era, we witnessed departure from the basics in the form of provisions of Blocked Input Tax Credit for specific types of supplies, despite of their use for business purposes only. It appears, that administration, for want of achieving short term goals has completely ignored basis of the law, which we can see in the form of numerous restrictions posed in claim and utilisation of ITC such as Rule 36(4) & Rule 86A.
4. One Nation One Tax One Market: There are no two views that GST has paved the way to create harmonious market in the country. However, as far as ‘one tax’ in concerned, though it is not single enactment, but all enactments are drafted with same spirit and hence contributed for making similar tax rates and compliances in whole of country.
5. Technology Based transparent law with time bound processing: Non-implementation of originally envisaged various forms including returns, damaged the whole eco system. Not only return, rather processing of refunds remained one of the major hurdle faced by tax payers.
At this eve of third year of GST implementation, I sincerely hope that government will relook GST implementation & will do the needed to revamp it, trusting the tax payers of the country.
GST आने में लग गए 17 साल,
1 July 2017 को हुआ ये कमाल,
आज भी सबकी जुबान पर एक ही सवाल
क्या बदलेगा ये देश का हाल?
GST slogan is “One Nation One Tax” and it comes up with the theme of “Simpler Tax Regime”.
GST brings many changes, which are appreciable as it removed cascading effect and bring uniformity in set-off of taxes. In addition, State GST Acts are uniform all over India, which widen the scope and brings complex to easier tax system in India. It benefits Professionals also because it widens the scope of work of professionals.
In these 3 years, neither GSTN improved nor the Govt. done anything. Many honest taxpayers paid late fee and now Govt. come up with amnesty scheme and waived off late fee from 1 July 2017, but not announced the refund of late fee already paid by honest taxpayers.
The tax which comes up with the mission of simpler tax regime, becomes complicated and in past 3 years so many changes are made in this simple GST Act & rules, then also it didn’t become simple so far.
If we talks about its simplification than how that tax system can be simple which is having 3 due dates for a single return (yes I am talking about GSTR-3B which is now staggered due dates). This is due to poor infrastructure provided by GSTN, which is not able to bear the last moment rush, which is obvious on last dates.
Some of major issues, which I want to include here, are:
1) Rule 36(4) which says ITC is available only if is reflected in GSTR-2A, while GSTN is not even able to launch streamline flow system of credit through GSTR-2 & GSTR-3 Returns and also if GSTR-1 is filed by many taxpayers quarterly then how can ITC comes in GSTR-2A monthly?
2) Section 50, which says interest on late payment of GST, is applicable on Gross Liability, which is truly illogical, and change, which is announced in GST council meeting some months back not notified till now.
3) How can we forget about GST Annual Return, which actually not drafted correctly, For FY 2018-19 GST Annual Return does not have break up for Year 2017-18 & 2018-19 separately and Govt. feels that taxpayers have to file this form correctly in one go, means no option to revise GST Annual Return is given to taxpayers.
4) There is no option to revise GSTR-3B till now.
3 years! GST travelled so fast in its initial years. It is still getting settled. It was beautifully conceptualised. I feel that we are more vocal on social media and pick every small thing. In earlier tax laws, there was no voice on social media. Things were not used to spread so fast. But nonetheless it has its negatives also. Let me list out its 5 positives and 5 Negatives point of GST in all these three years of Life of GST.
Starting with the 5 positives first:-
– ITC of goods to service providers
– Online registration & Return
– Uniformity in provisions
– Industry can reach the GST council to make recommendations
– Lesser visits to the department
But then what make it sour for tax payers. Let me list 5 negatives now.
– GSTN portal is the biggest setback for GST.
– Lack of a proper form for returns.
– Day by day increasing blockage on ITC.
– Hybrid system for refunds. It is half online half manual. Even now when CBIC claims that it is fully online.
– Unwarranted detentions of vehicles.
Now it is time for suggestions. Following are the five suggestions for improvement.
– Link GSTR 1 with GSTR 3B.
– Remove blockages from ITC.
– Make refund process smoother by ensuring the timely reply from Department.
– Cross jurisdiction should be removed.
– Scrap annual return.
GST – Good & Service Tax presented as Good & Simple Tax appeared to be simple & prosperous tax at its outset as it carried an idea of subsuming several taxes in one basket, thereby reducing the paper work burden & avoidance of several forms which existed in the erstwhile regimes of Indirect Taxation. Indirect Tax being Regressive in nature, its careful implementation is a pre-requisite for its success for any Nation.
However today after 3 years, it appears that we seem to have went backwards, rather than moving ahead in terms of revenue growth or individual business growth in particular as today the due dates, back to back have taken away the peace of everyone directly related with GST compliance leaving less time to do Business for a Businessman. Moreover the benefit, Revenue can get from the same is declining day by day which took the hit further with global slowdown.
The beauty of a successful taxation regime lies in the way it is implemented aiming ease of compliance at tax payer level & revenue stability & its maximization at Government level.
With over a thousand Notifications & Circulars issued in last 3 years, all of them to be remembered are not anyone’s cup of tea, and thus expecting GST to be simple will not be less than a mistake.
In order to make GST a success the law makers need to understand that when dealing with Indirect Tax compliance, every tax payer sails in same boat, whether big or small, hence utmost care has to be taken that even a small tax payer operating on its own can understand the law, prepare the required data on its own & can file the same himself.
Moreover a single head for collection of tax must be kept which in turn will be utilized & apportioned during the filing of Returns.
RCM was always an area adding to additional paper work. When we observe it with the view point of ABC analysis, we will realize it contributes only meagerly to the Revenue, whereas it adds a lot to the compliance, may it be its correct disclosure in returns or in books of accounts.
To conclude with – success of GST is guaranteed with continuous intake & implementation of feedback from ground level users of GST.