On 1st. July 2022 GST is completing 5 years since it’s introduction in India. These 5 years have given so many golden moments coupled with lot of challenges. These challenges were faced by the Tax Payers and professionals. In this 5th Anniversary special article, I am talking about these challenges and the Road ahead.
Also Read in Hindi: जीएसटी के 5 साल – चुनौतियों का सामना और आगे की राह
First, we should enumerate the basic objects of introduction of GST in country: –
|1.||One Nation One Tax|
|2.||Avoid Cascading Effect.|
|3.||Reduce the Number of Indirect Taxes.|
|4.||Reduce the distinction between the Goods and Services.|
|5.||Remove the barriers of interstate Movement of Goods.|
|6.||Increase the Tax Base.|
|7.||Enhance the Tax revenue|
Let us First talk about the Golden Lines of GST in these 5 years. What the Indian Economy, the Indian Government, Tax payers and Professionals achieved with GST with these 5 years. The number of Taxpayers has increased and also the tax base. Further the GST revenue is also increased from Month to Month and even after Covid period the progress of GST collection is maintained. The Cascading effect of tax i.e. tax on tax was also removed to certain extent.
On tax payers front one more big relief is that they are now free from the burden of collection of Declaration forms specially the C-forms. These forms were the biggest problem of VAT. The export refund, after initial year problem were very fast. Further lot of Taxes are subsumed in GST so on that front Tax payers has big relief. So many Tax leads to so many compliances hence a big relief is there.
GST is technology-based Tax so all the stake holders have become more technology savvy and these includes the dealers, professionals, GST officers also. So, GST has made biggest technological updating for the taxpayers’ community in the Country.
Now the challenges faced by all the stakeholders in these 5 years. The stakeholders were the Law makers, the GST officers, the tax payers and the professionals. All these 4 groups faced equal challenges from GST in these 5 years.
The Law makers of the country has taken a very bold step to introduce the GST in the country in 2017 and since it was a biggest reform hence initial challenges were inevitable. These challenges will make this tax very strong in near future.
The first group was Lawmakers who made this very important Tax law in the country but the procedures of GST since beginning was very strong and confusing so lot of clarifications/ Notifications/ Circulars were issued by the issued and this shows that there was lake of stability in the law and surprisingly more than 1100 clarifications/Notifications/Circulars/press released/Twitter Massages were issued and this was the biggest challenge with the Lawmakers.
Let us have a look at the Notifications and circulars issued by the Law makers in these five years: –
|GST Notification -Tax||75||79||78||95||40||07||374|
|GST Notification – Rate||47||30||29||05||22||02||135|
|IGST Notification – Tax||02||04||04||06||03||0||19|
|IGST Notification – Rate||50||31||28||5||22||2||138|
THE CHALLENGES FACED
Now with recent decisions of the GST Council in the 47th Meeting held on 28-29 June 2022 more such Notifications and circulars are awaited.
For a New Tax Like GST, we can presume that lot of confusions and complexities should be there but see the numbers as mentioned above of issued Notifications and circulars one can presume that since inception stability was not there in GST and it is the big challenge for the Law makers.
GSTN- the GST new work was a biggest problem for Law makers since inception and first 2 or 3 years were passed with a very bad situation and GSTN’s failure at initial years has created lot of bad images for law makers. The situation is little bit improved but still GSTN is giving troubles from time to time and it is a big concern for the law makers. GSTN has created very awkward situations for the Law makers since inception of GST.
The Law makers were unable to answer the biggest answer of the question of Tax payers. Why GSTR-3B can’t be revised. Even the lawmakers were unable to implement the return system initially planned and what is introduced in place of the originally planned system was not a fool proof system and in the whole process GSTR-3B, which was not the part of original scheme, has become the main GST Return and this main GST return has no facility to rectify the mistakes. The situation is the same even after lapse of 5 years!!!!!!!!
The issue of interest on delayed payment of tax turned out to be a biggest challenge for law makers and they have taken so much time to resolve the problem though it was not a problem but a mistake.
Two years of Covid were also the biggest challenge for the law makers but it was faced by them very successfully and at the last the pace of collection was maintained to save the situation.
Now other stakeholder is GST officers and the scrutiny of returns is the biggest challenge before them. Lot of Notices are being issued and most of out of these are related to Non issues or Minor issues. Even Notices are being issued for Minor amount of Rs.2 or Rs.4. The number of notices will create problems for GST officers to dispose them.
Even notices were issued for interest demand during the Covid period for which relief was already given by the Government. The question asked at the time of disposal of New Registration Applications is a big issue for GST officers and sometimes it shows that there is a need of proper and extensive training. Some times irrelevant questions were asked resulting in very confusing and awkward situation.
Now two more stake holders are there. The professionals and the Tax payers and since professionals are working for Tax payers hence most of the problems are common. Strict GST procedures and GSTN was the biggest problems since inception of the GST and it has created lot of problems both for Tax payers and professionals.
ITC is the backbone of GST and free flow of ITC is promised since inception of GST but this ITC has created lot of problems for tax payers. All the mistakes of Sellers i.e. non deposit of tax and not filing of returns are not in the hands of the purchasers in the form of withholding the ITC of purchasers. In the beginning or even after initial years of GST no action was taken for mismatch of input Tax credit and then gradually so many impractical restrictions were imposed to make it more and more complicated.
ITC mismatch was the biggest problem in VAT also and in that case the law makers have the same solution i.e. withheld the ITC of the purchasers but in that case, they give sufficient time to settle the mismatch before asking the purchaser to deposit the same but in case of GST the situation is worst for the dealers seeking input credit though they have been promised the free inflow of GST.
The number of Notices issued by the department is also a biggest problem for tax payers. Even tax payers are receiving the Notices for the petty amount of Rs.2 or 4. This is sheer wastage of time and resources. The tax payers are receiving notices for payment of interest for the period for which Government has already issued waiver.
THE ROAD AHEAD
Now GST is five years old hence it is time for the Government to solve the problems of the Tax payers and further still there are lot of confusions in the GST law and these confusions are creating lot of problems for the Tax payers. Here we should enumerate the key areas where solutions are required along with the suggestions to improve the situation to make the GST a viable, useful, tax payer and professional friendly and simplified Tax: –
|1.||Input Credit: – Sellers should be made responsible for Deposit of Tax and in case of Mismatch sufficient time should be given to the dealers to settle it but ultimate liability should be of sellers.|
|2.||GSTR-3B Revision: – The facility to revise GSTR-3B should be given immediately. For want of this facility lot of discrepancies are there and lot of Notices are there and all these activities are taking so much time of Dealers, Professionals and the Department.|
|3.||Reform in Returns: – The purchasers have no facility to submit the details of their purchases but if sellers are not depositing tax the liability is fixed on the purchasers. Even the department has no knowledge about sellers’ failure to pay tax on particulars sale. The restriction mentioned in section 16(4) are also too harsh and tantamount to double taxation.|
|4.||Annual Returns: – The format of annual return has no meaning and presently it is not very useful return. This form should be re-drafted to make it more useful and this form should give the dealer a proper facility to declare his actual tax Liability.|
|5.||Interest Rate: – The Interest rate in GST is very high specially comparing the Interest rates prevailing in the Banking and Financial Sector. The rate of interest should be fixed at 2 or 3% more than the market rate instead of making it too high.|
|6.||Artificial Restriction on ITC: – Artificial restrictions on ITC should be removed specially the restrictions mentioned in Section 17(5). See that the ITC is available on Mobile phones and Computers but the same is not available on Motor vehicles which are used in business of the dealer!!!!!!|
|7.||Number of Notices: – The number of notices issued in GST should be checked. Even Notices are issued to deposit Rs. 2 or 4… The minimum amount should be fixed to reduced the burden of Taxpayers, professionals and Department.|
|8.||The Interest on Tax Liability should be stooped from the date on which the amount of Tax is deposited by the Dealer instead of charging it up to the date of submission of GSTR-3B.|
|9.||The Number of Notifications, Clarifications and circulars are too much and making the Law more complex and confusing and Now the Act and rules should be revisited to make them as simple as possible and rate of tax should be fixed in such a way that No upward updating should be made in Next 3 years.|
|10.||RCM is the confusing and unnecessary provision of GST. Most of its part were removed in the initial Month of GST but still it has it’s effect in the form of Some of the Notified Goods and Services. In all those initial 5 years the Taxpayers have not followed it properly but in most of the cases it has no financial effect on the revenue of the Government. In such cases a relief is needed with some sympathy with these innocent dealers.|
|11.||In case of E-way Bills the List of Technical and innocent mistakes should be increased to impose on minimum penalty. There should be a transparent system while checking the vehicles in Transit.|
|12.||Human intervention should be Minimised in case of all the system and ground level decisions of and most of the replies should be accepted on online or E-mails.|
|13.||GST amnesty Scheme should be there to declare and correct the initial Mistakes made by the dealers while filing the GST returns.|
|14.||GST Appellate Tribunal should be established ASAP.|
|15.||GST Should be made a Simplified Tax.|