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CA Satish Sarda

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 satishsardanagpur@gamail.com)

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89 Comments

  1. DINESH BANSAL says:

    1st january is the best solution for g.s.t. if they agree.. Before starting g.s.t they have to see the infrastructure of the country. electricity,internet is the main problem,without these the business can not run

  2. T Sampath says:

    When going through all the suggestions referred above it is absolutely necessary for the center to look into the various suggestions & difficulties to be faced by all the assesses . The Govt should not be in a hurry for the sake of prestige & try to look into all the practical Issues raised by every one & see that a simpler method is evolved . The success of the GST Scheme depends more on its easy maneuverability & ease in understanding the scheme by the assesses/ Govt Dept as well as auditors. At present all are in dark situation . Hence it is suggested to the central Govt headed by Shri Modiji to rethink the implementation date & better if it is Implemented from 1st April 2018

  3. CA Rajendra mandhana says:

    Sardarji, what you suggest, sounds convenient. But constitution amendment does not permit levy of taxes subsumed in gst, after 1 year from 16.9.16. Hence there is no room exceeding 2 months to postpone gst

  4. T K Shanbhag says:

    The letter to Modiji is justified for following reasons. The July 1 rollout may be pre-matured.
    1. There should be clarity with regard to practical issues and the provisions of law on the part of relevant authorities.
    2. The professionals and consultants should be properly informed and let them be thorough with the provisions.
    3. The trade and industrial associations should be thorough with the requirements of the new law and as to how their members to act upon with the implementation of the same.
    4. Since the operational part of the law depends fully on system and on-line, the authorities should ensure that the server and the software works properly before roll out.
    5. The suggestion to postpone the date is tenable not only on the part of dealers but also professionals since the auditors are busy with tax audit works and they may not be able to devote much time to guide their clients with the transitional provisions and impacts of the pre-GST dealings with that of post-GST provisions.
    6. It is the experience of the professionals and the dealers that on implementation of the new law the acts done during the initial years without proper knowledge of practical issues on trial and error basis would be questioned by the authorities after a span of 4-5 years and any lapses might attract penalties/interest/fees etc. The authorities are also not giving any clarity with regard to how the dealers should act upon during the initial period of law implementation.
    7. If there is any proposal to change the fiscal year to calender year, both the issues could be taken together which would facilitate the dealers, general public and also economy of the nation.
    8. Constitutional hicks to be resolved and also to see that all the states have passed the bills for ensuing GST.

  5. prabhakar says:

    Yes , the author is absolutely and correctly justifying why it should not be implemented in hurry. The Govt should think of the issue as success instead of prestige. First of all for migration itself the website is not supporting. Majority of the time it is closed for maintenance and enhancement. States VAT websites
    being limited jurisdiction in few lakhs users are working properly . When all the states users have to work on one single GST site crores of users I do not think the servers can support and withstand the load. In such a situation it leads to disastrous and failure. So till Jan 18 let VAT filings be continued and simultaneously run the GST filings also from July 1st on trial run basis so that any shortfalls and updates can be identified and the infrastructure can be modified suitably.

  6. CV.Jagadeesh says:

    Yes, you are right. Tax payers, professionals and tax consultants can study in details and understand the complete GST Acts, Rules, Formats, etc., at least for one level before implementing GST.

  7. Raj says:

    Sir, i agree with your worries, but in India if you give 10 more years to all the tax payer to migrate to GST they will wait till the last month of 10th year and I if govt has decided 1st July it should be from 1st July if 1st July is not than it should be after 2019 general elections.

  8. CMA K K MALLICK says:

    Thanks Mr.Sarda.I fully agree with your views.Hurry implemetation of GST from 1st July 2017.will be again wrong step like demonetisation.

  9. Chandrakant Patil says:

    You are obsoletely correct. To implement GST is like to make change in sea. In my opinion it will harmful to entire economy if implemented in hurry, and if Govt. is thinking to change the Financial year to Calendar year, it will be defiantly good to Implement both the thing at a time.

  10. GYANA RANJAN SAHU says:

    Sir, this is a very well written article reflecting the overall sentiments of consultants as well as the traders. I am really amazed by the replies and comments expressed so far. In all 67 replies to this article. In fact, when we the consultants do not understand the nitty gritty of the complex law, think about the small traders. I think your proposition is a good one and must be accepted by the people In the power. The banking sector as well as the Airlines has expressed their inability to implement the reform from 1st July. The system is not yet complete with the IT infrastructure as well as the Act and Rules. Still deliberations finalising rules are going on. If it is implemented from the proposed date, surely I agree the reform will be disastrous.

  11. Varadharajan S says:

    Well Written Article, fully agree with the view and contents of the article. But the pathetic situation is no one from the government is willing to listen any suggestion….

  12. CHAKRAPANI E G says:

    Yes, GST is coming & there are little bit of teething problems from the Government & the Traders. There will be NO END for postponing the implementation of GST. Let there be a 3 months of Trial & Error where in the Government should not penalize.
    This is my opinion.

  13. Amal Kumar Bera says:

    Yes Sir, I am fully agree with you. As my opinion not only the businessman also the tax consultant or taxation lawyer should get some more time to learn about G.S.T. Thank You.

  14. Amal Kumar Bera says:

    Yes Sir, I am fully agree with you. As my opinion not only the businessman also the tax consultant or taxation lawyer should get some more time to learn about G.S.T.

  15. Amal Kumar Bera says:

    Yes Sir, I am fully agree with you. As my opinion not only the businessman also the tax consultant or taxation lawyer and should get some more time to lern about G.S.T.

  16. CA. Sunil Kumar S says:

    I too subscribe the view of implementation of GST from New year, if the proposed change to calendar year.

    Still some of the states has to pass the SGST. The time is too short for making understanding and implementation.

    If the implementation to be done on 1st July 2017, it should be parallel implementation and not full switch over

  17. G.C.Pramanik says:

    I agree if govt. implements new tax reform without preparation , the indian economy might be collapsed,for which both ruling and opposition shall be responsible. govt. should rectify the followings things a middle businessman is facing and will be facing : (1) GST software should be made in such a way that a lay man can be able to operate, (2) Present software is very painful please realize it.(3) Duration of return file should be half yearly (4) as per present GST rule one have to file 3 return in a month , is quite impractical, which can be felt by a only business man no by a political person who speech only 90% lie and who does not have pay any tax or bill only enjoy with public money.
    thanks, comments if one agree with me.

  18. D.K.Motiwala says:

    Dear professional Colleagues , It is well known truth that six learned person always had seven opinion on same issue . Same is here we had faced the demonetization and had seen the effects . Almost in every Govt. Dept., organization even hospitals , schools and schemes (whatever name called ) Common man ( Poor) suffers a lot in the name of welfare .. Reason is one – No planning , no implementation , incompetent workforce their negative attitude , lack of accountability and sympathy to common man in simple word pehle karo phir bhugro . Cure is one – pehle socho samjho fir karo . Their r crores of Indians (poor) serving / dependent on unorganized sector , can any one reply how GST going to bring happiness and smile on their face and roti to their plate.Had we ensure that small vendors , hawkers and traders shall understood new Tax and ready to adopt ? be it July or any day Common man once again in line of fire . it would have been better if we plan , educate our citizen and give them an opportunity to be a part of success the so called reform .

  19. K p m Babudeen says:

    I accept your voice against GST. First the GST panel should explain the law to the common people. Because they are only true GST payers , think about it Why not implementation of GST from Ist April 2018 ?

  20. Jacob Joseph says:

    The article is very good and is proved where the promoters of GST have failed;. I have a typical problem not solved by GSTN till date. My client in Kerala is auto populated with Andhraparadesh Circle . Whenever I contacted GSTN help desk they directed me to contact VAT circle. When I tried to contact VAT circle in Kerala nobody is picking up even the phone calls.. I sent at least 10 mails to help desk GST . No response. At last I filled the fields, without signing, carrying the defect. If this is the initial situation what would be
    the fate of future transactions. It is absolutely sure that government is ‘imposing’. GST on people. Considering all the aspects it would be better at least starts the journey from 01.09.2017. Let people study at least the basics so that people may not be taken to task by authorities. The persons who are for GST from 01.07.2017 do not understand the practical difficulty common man face.

  21. DEEPAK KEDIA says:

    What you have written is correct but no government think of problems of SME’S .It seems Government is hell bent on implementing GST whether it is half cooked.If IT system cannot manage migration God knows how it will be manged once GST is implemented.

  22. CS. Sudershan Kumar Arora says:

    Dear Mr. Sarda,
    I am fully agree with your study and anticipating the difficulties to implement the GST hurriedly which will force the Government to bring notifications to amend the law and confusion in the minds of traders.

  23. Jitendra Shah says:

    Be positive .. at the time of implementing VAT the same negative thinking was initiated ..later on the same is running as it should be…BUSY- MARG – and so many other softwares are giving demo of the GST & return filing process .. please refer it .. as per my opinion it is simple to under stand — but if some one has mind set to opose the GST than there is no question of discussion the GST regem

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