GST – Good and Simple Tax- A Myth!!

Leave apart the frequent changes in the GST law by way of notifications and circulars which have made compliance very complex both for the businessman as well as the tax professionals. Certain sections in the law itself is not in favour of the common traders. The FM in her parliament speech had said there are certain green shoot available which indicate that economy in on the revival path, one such point is the increase in the GST collections when compared to the previous months. In this regard I would like to bring into notice 3 matters in GST law –

• The council vide notification no 75/2019 central tax dated 26-12-2019 has restricted ITC only to the extent of 110% of the eligible inputs reflected in GSTR-2A. This has led to greater compliance burden for the Businessman and has placed restriction on them availing ITC, as we cannot expect all the suppliers filing their returns accurately. For example:-A trader has correctly disclosed sales of Rs.1,00,000- in GSTR-3B and paid tax on it. However while filing GSTR-1 instead of showing it as a B2B sales he mistakenly showed it as a B2C sales. This sale transaction will not be reflected in the buyers GSTR-2A and he would be denied ITC for such purchases though he is eligible for such ITC and tax has also been duly paid by the supplier.
• The CBIC has recently issued a directive on 10-02-2020 to its officers to collect interest on late filing of GSTR-3B on gross tax liability i.e. without giving the benefit of Input tax credit while calculating interest.
• The adjudicating authorities have started levying penalty under section 125 of the CGST Act, 2017 if there is any delay in filing GSTR-3B for more than 30 days after the due date, though the tax payer had already paid interest along with late fees for delay in filing GSTR-3B. This kind of notices are unnecessarily harassing the small traders.

Reply to a RTI enquiry revealed that the government has collected 344cr in the month of Dec-2019 by way of late fees. This shows the ground reality of the difficulties people are facing while filing GST returns. By adopting such unfair measure the revenue of the government will surely increase, but the measure undertaken is completely unethical. Moreover this in not is line with the government aims of ease of doing business. Or we can say that government’s repeatedly saying that GST is a good and simple tax or that it has become easier to do business in India is just for name sake but the ground reality is completely different. The Government’s continuous efforts to reduce tax harassment is not evident from its tax policies.