GST: Steps towards Simplification with New Challenges

Recently at 22^nd and 23^rd meeting held by GST council has came up with many changes in the GST law so that to ease the path of GST. GST council has issued 39 Notifications and 2 Circulars dated 13^th October 2017 and 27 Notification, 2 Circulars and 2 Order dated 15^th November 2017 as steps towards simplifying the tax system in India. Key amendments and difficulties that may be faced by the taxpayer to implement these changes are discussed in this article.

Reverse Charge under Section 9(4) of the CGST Act suspended for certain period

Reverse charge provision with respect to unregistered taxpayer are suspended from 13th October 2017 to March 2017. This is one of the big relief to all taxpayer not only by way of reducing compliance burden but also it aids to reduce practical challenges faced by unregistered person after implementation of GST. However, this Notification does not mention the date from which said provisions are applicable hence it can be interpreted that it is applicable prospectively from the date of notification. Given this taxpayer has handled the challenge to compute the liability of GST payable for the month of October while filing of GSTR-3B. It is quite difficult task to track time of supply for each unregistered transaction so that to determine liability of GST.

GST is payable on the date of Invoice for supply of goods

As per Notification No. 40/2017-CT dated 13^th October 2017, the registered taxpayer having turnover below 1.5 Cr towards supply of goods is allowed to pay tax, on the date of invoice raised hence not required to trace receipt of advance. Further, said notification extended to all other registered person by way of Notification 66/2017-CT dated 15^th November 2017. Given this, now GST does not attract on receipt of advance on supply of goods. However, for supply of services GST will be payable as per time of Supply (i.e. Section 13 of the CGST Act). In this regard, difficulty could arise when taxpayer is engaged in the supply of goods as well as services to same customer. Unidentified advance received (i.e. whether towards services or goods) from said customer then it is difficult task to determination time of supply for said advance for payment of GST.

Quarterly GSTR-1 for the taxpayer having turnover up to 1.5 Crore

Notification No. 57/2017 – CT dated 15^th November 2017 notifies that the registered persons having aggregate turnover up to 1.5 crore in the preceding financial year or in the current financial year shall furnish quarterly, the details of outward supply of goods or services or both in FORM GSTR-1. This amendment certainly reduces the compliance burden of small taxpayer. However, said amendment is applicable where aggregate turnover is up to 1.5 crore in the preceding financial year or the current financial year. In this regard, it could be difficult to project aggregate turnover of current financial year. Also, said notification does not clarify the procedure if aggregate turnover increased above 1.5 crore during the year and who has filing quarterly return before that. Hence it is un answered whether in between year can taxpayer shift to monthly periodicity. Further, said provision could create challenge while availment of input tax credit by the taxpayer filing GSTR-2 monthly on the basis of GSTR 2A auto populated from vendor who are filing GSTR-1 quarterly.

No compulsory registration in case of person engaged in interstate supply having aggregate turnover up to 20 lakh

Central Government vide Notification No. 10/2017 – Integrated Tax, dated 13^th October,2017 has exempted person making Inter-State supplies of the taxable services and having an aggregate turnover not exceeding Rs.20 lakhs in a financial year from obtaining compulsory registration. However, interstate supply with respect to good is not allowed to unregistered business. This still leads to restricted business environment for small business engaged in supply of goods.

Given the aforesaid, taxpayer could face some challenges because of certain amendment made by GST council with an aim to simplify the GST law. However, Governments steps towards simplification certainly help to reduce compliance burden if said challenges are addressed appropriately. Definitely, further amendment and simplification is necessary to achieve aim of ease of doing business.