GST Stakeholders: Happy New Year

Dr. Sanjiv Agarwal, FCA, FCS

As we enter into 2019, we have surpassed 18 months of GST Raj in India since July 1, 2017 and soon be finishing up with first full financial year of 2018-19 under GST regime.

This is no time to admire or criticize GST but to address the implementation issues including the technical glitches it is confronted with. As the data would reveal, the high-empowered Council, GST Council, which takes decisions under GST regime has had 31 meetings so far including 7 in 2018 itself, more than the average board meetings, an Indian company generally holds in a year. The 32nd meeting is scheduled for 10th January, 2019.

The present statistics on GST reveals as follows :

So far, in two months only, i.e., in April 2018 and October 2018, GST collection has crossed Rs. 1 lakh crore. The total gross GST revenue collected in December is Rs.94,726 crore. This comprises CGST (Central Goods and Services Tax) amounting to Rs.16,442 crore while collection from SGST (State GST) was Rs.22,459 crore and from IGST (Integrated GST) was Rs.47,936 crore (including Rs.23,635 crore collected on imports), beside cess of Rs.7,888 crore. The total number of GSTR 3B Returns filed for November, up to December 31, is 72.44 lakh. Tax collections so far suggest an impending short all in 2018-19 against budget estimates.

The implementation of GST all along has been facing troubled waters, mainly due to technical glitches. There has not been a single return whose last date had not been extended. The taxpayers and professionals have been running from pillar to post for compliances, filings, understanding of law and what not.

The fragility of law and procedures can be gauged from the very fact that on one hand, adjudications in GST have barely commenced, and on the other hand, we have over 200 writs in various courts and similar number of advance rulings across the country. To tax payer’s plight, we find that different rulings are being pronounced by different State Authorities on the similar issue. E-way bills have contributed to most of the writ petitions. Courts have passed strictures against the tax offices and even imposed fines on officers.

2019 being an election year, we can expect some taxpayer friendly decisions and roll-backs in rates as well as simplification of procedures. New return filing mechanism is on the cards. The tax rates are now being rationalized and lowered. A higher threshold limit is being thought of in place of Rs. 20 lakh. It could go up to Rs. 75 lakh which may be a real relief as the present threshold limit is based on ‘aggregate turnover’ which is wide enough to cover even exempt and non-taxable supplies. This in many cases causes hardship and real beneficiaries for whom it is meant are not able to avail this exemptions. Thanks to the forthcoming elections.

The forthcoming meeting may also bring respite to the struggling real estate sector as GST rate may be reduced on under construction and finished residential accommodation. If this can trigger sales, it will have a multiplier effect for all developers, buyers and revenue as well.

There is also a rising demand on simplifying the procedures for small businesses to increase compliances as well as new registrations. There are over 7 crore such businesses in the country and a major chunk of such businesses can be brought under GST if procedures  / compliances are made simple and traders are not harassed unnecessarily. Lack of awareness also holds back the traders to come within GST ambit. Some favourable decision is expected on this too.

It is highly possible that GST Council and Government will take all possible steps to lure the voters in next few months in the wake of forthcoming elections in May, 2019. However, the loose ends may be fixed post election atleast to curb tax evasion and ensure higher level of compliance and tax recovery, which is in any case, desirable. Filing of multiple returns was flawed since inception and it ought to be corrected, sooner the better. Efforts should also be made for ‘one nation, one tax’ a reality. This also requires ‘one return’. Further, State wise Advance Ruling Authority must be abolished and there should be only one Authority with multiple benches.

It has been promised that GST rates will be further reduced and tax slabs merged to have just three rates. While 2018 was the year of understanding and implementation of GST, 2019 can be seen as year of ensuring simplification, rationalization and smooth implementation.

GST shall continue to be a major work in progress for next 2 to 3 years and we have to collectively make it a grand success. The only expectation from the Government is to be fair, reasonable and transparent in thoughts and actions, both. This will happen, if the people in tax office also change their mind set and understand the taxpayers needs and overall interests of nation and economic development.

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