Any new reform, particularly a tax reform, is bound to have initial resistance. However tax paying businessmen were so frustrated by multiple taxes and compliances under earlier laws that they welcome GST wholehearted hoping it will solve all their problems and GST will be easy to understand and implement.
The government also trumpeted GST from top of the roof, in spite of the fact that Government was ill prepared for it. It believed that it has taken so long that the drafting personnel have made it full proof. On paper and conceptually GST is very good but practically not easy to understand and implement.
Getting input tax credit is essential character of GST. The act, rules are so framed that output liability will accrue at the earliest point of any transaction and credit of input tax will be deferred as long as possible or may be completely denied. Denial may be on account of failure on the part of suppliers (No fault on the part of claimant) or failure to claim it within stipulated time.. This provision is not palatable to taxpayers as it increases their tax liability. Any honest tax payer is ready to pay his own tax liability but paying additional tax with interest for fault of others is too much to digest.
Government failed to put in place mechanism to claim proper input tax credit in real time as provided in the Act. Instead of doing so the act was amended to do away with proper cross matching mechanism. Amendment has put tough task on tax payer to constantly monitor the input tax credit claimed and reported by supplier. If it is not reported by supplier, tax payer is required to reverse the credit with interest. This provision has created lot of bad will for GST. Demand for Revised return which could have solved many reconciliation issues have been stubbornly rejected so far.
Knowing fully well that without robust software and supporting infrastructure GST will not deliver desired results, Government has entrusted the job of developing GSTN system to reputed software developing company i.e. Infosys. The system was not tested properly before it was implemented. At the time of filing first return under GST it became evident. Then hurriedly temporary return forms were introduced without suitable amendment to Act. During last two and half years forms and their validation for uploading were amended, changed many times without prior notice to tax payers. If the change in system requires time for Government it is equally true for businessmen. Accounts writing and record keeping is now mostly done on computers by using software packages available in market. When any amendment is made in act, rule or forms the software packages are also required to be suitably modified. It takes some time. Without considering this practical difficulty amendments in rate, classification, form etc have been made effective with immediate effect. There were too many technical glitches which prevented tax payers from timely compliances and reporting. But Government was not ready to accept the faults and was insensitive towards genuine demands. It made many tax payers to approach High courts for redressal. Large number of writ petitions were filed. In one of such writ petition high court of Bombay admonished the Government in following words
“The special sessions of Parliament or special or extraordinary meetings of Council would mean nothing to the assessees unless they obtain easy access to the website and portals. We do not think that these are satisfactory state of affairs. We hope and trust that those in charge of implementation and administration of this law will at least now wake up and put in place the requisite mechanism. This is necessary to preserve the image, prestige and reputation of this country, particularly when we are inviting and welcoming foreign investment in the State and the country. We hope and trust that such petitions are rarity and the Court will not be called upon to administer the implementation of the law, leave alone monitoring and supervising the working of the individual officials, howsoever high ranking he may be”.
It is pity that Government has not changed its ways. Over 500 notifications, circulars, clarifications, amendments issued in last 30 months is enough testimony that GST was hastily implemented. Drafting of act, rules, notifications and circulars is full of ambiguity. Provision for TDS, TCS, reverse charge, matching of three taxes separately, deemed supplies, e way bills etc. has really made GST complicated for common taxpayer. It is nightmare for tax professionals, tax officers and tax payers to keep pace with frequent changes and understand it properly. On top of it every small unintended mistake or ommission invite penalty. At present there is cash crunch in market. Interest in GST is prohibitively high. Small & medium businesses are worst sufferer.
Industrialist Mrs. Kiran Mujumdar said it succinctly that” businessmen are forced to spend more time in meeting compliances than running their businesses, Tax laws try to criminalise every non-compliance. This is now the trend “
There are too many glitches to stich. It is suggested that remove unnecessary reporting. reduce validations in system. All amendments should take effect from 1st April every year including return formats. GST needs complete overhaul to make it taxpayer friendly. Otherwise taxpayers will hate it. They are already cursing. It appears FM has taken this wakeup call by asking all GST commissioners to attend to the grievances of tax payers on 7th December 2019.
Taxpayers should grab the opportunity to register their problems & difficulties and also make suggestions.