Goods and Services Tax is about to complete its first year in our Country. It is really a matter of proud that I belong to a State which has first passed /ratified the GST Constitutional Amendment Bill on 12.08.2016 in its State Legislative Assembly. Assam was the first in the Country to pass the GST Constitutional Amendment Bill. Finally, GST law was implemented in our Country w.e.f. 01.07.2017. Since its implementation we have seen many ups and down in this law. If we talk about our experience so far, it was a mixed bag. I believe that best of the GST is yet to come.
Implementation of GST law in the very next year of demonetization was a big achievement of the Central Government. If we review this one year, then one thing is certain that GST law was really a boon for some people/sectors whereas a few people are still struggling to know and understand its Knitty gritty. There were various challenges before the Central Govt. to implement GST w.e.f.1st July, 2017. Let us understand some key challenges which were obstacle in the path of GST implementation:
- Co-ordination between Centre and States and Co-operation from the State Finance/Taxation Departments.
- Getting ready GST Common portal within limited time frame.
- Making common mass aware of GST provisions and issuance ordinance /Gazette Notifications etc.
- Introduction of GST after the end of the first quarter of the financial year 2017-18 posed some questions.
- Proper training to the departmental/taxation officers with regard to law and GST Software/Common portal.
- Development and setting up of Infrastructure facilities at a rapid pace.
- Lack of electricity and Internet in the remote areas of the Country.
- Awareness and propaganda of GST at various levels.
But the Central Govt. had a dream of introduction of GST in the Country and its strong will has proved the saying correct–‘When there is a will there is a way’. All the challenges and difficulties were left aside and the Govt. announced 1st July, 2017 as the date of introduction of GST in India. Now, this day has become a historic day in the Indian Taxation System. After implementation of GST, there were lots of initial difficulties faced by tax payers. The following were the key problems faced by the tax payers, tax practitioners and public at large in the Country:
- Non working and slow speed of GST portal
- High and non-rational tax rates
- Reverse Charge Tax on purchases from unregistered suppliers/vendors
- Technical glitches and problems in filing tax returns
- Heavy late fee in case of delay in filing of returns
- High Compliance burden on tax payers in view of filing of four tax returns in a single month
- Keeping accounts of tax under three different heads
- Payment of tax by the exempted Industrial units and non- receipt of refunds of such tax.
- Ambiguity relating to refund of IGST paid on exports
But within a short span of time the Govt. has analyzed the situation and made genuine efforts to resolve those difficulties. This is a fact that whenever a new system is implemented it is only after its use or practice one can know the difficulties. GST was not an exception to this rule. But inspite of so many difficulties in the initial stage this law was able to bring some significant positive changes in our Country. It has really proved to be a boon. We have seen following positive impact of GST in our Country:
- Complete abolishment of Check gates and free movements of goods which saved lots of time and energy.
- Absence of Human intervention in the GST online working also put a bar on corruption.
- Unwanted visit of Tax department’s officials in the business premises of tax payers was minimal.
- GST opened lakhs of job opportunities in the Country and demand for accountant is still more than its supply. It paved the way for our move to the ‘Skill India” mission.
- Tax payers now using computers to keep their accounts and thus IT sector grew up leaps and bounds. Whether it is a computer manufacturer or accounting software developer or Internet Service provider everybody has got significant business. This encouraged our dream of ‘‘Digital India” and our digital literacy is also improved.
- Various new accounting firms emerged and number of GST practitioners also increased. Those who were not dealing in Indirect Tax matters are also in the race of GST. Apart from new generation accounting professionals, the old and senior fellows also joined GST saga. This has somewhere helped Country in its ‘Start up India” program.
- GST has created an environment of a Financial Discipline in the country because of the fact that tax payers are keen to comply now and their accounts and records are also upto date. It is really a good sign for growing Country like India.
- Online system has made tax collection fast, easy and less costly from the Govt.’s point of view. As a result the figures of GST collection have gradually crossed a mark of one lakh Crore.
- Our tendency to claim input tax credit even on petty purchases has encouraged receipt & issuance of sales bill on each and every transactions. So somewhere it has curbed the bad practice of non accounting of transactions.
- Various Social, Business and Trade bodies joined hands together to bring GST consciousness and Public Awareness. As a result it directly or indirectly helped in development of nation.
- Professional bodies also contributed towards nation by doing training programs, making study materials and conducting seminars on GST.
With the passage of time the Govt. has left no stones unturned in making GST law simpler. GST Council in its every meeting has taken some bold and big decisions so as to make GST less complex. A summary of important steps taken so far to simplify this law are as follows:
- The original concept of four Tax returns in a month (GSTR-3B, 1, 2 & 3) was gradually curtailed to two tax returns viz: GSTR-3B & 1. Further the Govt. has extended due dates for filing tax returns as and when felt necessary.
- Major changes in the Tax rates of various items whereby 28% items pulled to 18%, 18% items pulled to 12% & 12% items pulled to 5%. Further various essential goods were made tax free.
- Reverse Charge Mechanism (RCM) under section 9(4) was deferred/postponed till 30.06.2018 w.e.f.13.10.2017.
- Reduction in the late fee payable for delay in filing tax returns from Rs 200/- per day to Rs 50/-per day /Rs 20/- per day.
- GST on advance receipts against sale of goods is also kept in abeyance. It reduces burden of keeping a track and trail of advances.
- Inter-State service providers are relaxed from compulsory registration upto a turnover of Rs 20 Lakhs/10 Lakhs.
- Constitution of GST grievance redressal mechanism and GST Self –Service Portal whereby the tax payer’s problems are being resolved online.
- Enhancement of threshold limit for Composition dealers from Rs 50 lakhs/75 Lakhs to 75 lakhs / 1 Crore.
- Making GST refund mechanism simpler and further Govt. has observed a refund fortnight from 31.05.2018 to 16.06.2018.
- Exports are made possible on the basis of Bond/LUT and without payment of IGST tax.
- Transporters are freed from getting registered under GST. The same is kept optional.
- Introduction of E-way bill and further making various amendments in the E-way Bill rules to keep the same more practical and useful.
All the steps so far taken by the Govt. in making GST simpler are really a welcome move. We are thankful to the Govt. for understanding the problems of common mass and resolving the issues. But there is still a long way to go and GST law is yet to be made simpler. As on date traders, Tax payers and Tax practitioners are getting problems with the complexity of GST and now it is high time to do away with such complexity. If Govt. makes this law simpler and user friendly then it is really going to be a reform of the decade and will boost our economy. It is further seen that people don’t have problems with the GST law rather problems are coming in its compliance, tremendous increase in paper works, improper functioning of GST portal etc.
In order to make GST law simpler the following are the few suggestions to the Govt. and I am not only sure but confident enough that the Govt. will take care of each and every issue in the coming period. The important suggestions are:
- should either make provision of filing revised /rectified GSTR-3B else add a separate tile/column for prior period adjustments in the GSTR-3B so that mismatch can be avoided.
- should collect money under one common cash ledger and allow assessee to adjust the liability there from as per their need and requirement.
- should change/amend GST rules suitably and make sure that wherever the assessee has balance in cash ledger no interest will be collected even if offsetting of liability is done after the due date.
- Definition of ‘Aggregate Turnover for the purpose of registration should be changed and non-taxable and exempted turnover should not be included therein.
- Amount of Late Fee should not exceed Tax liability of an assessee.
- Provisions of Composition Scheme to be amended further by allowing Inter-State sales, condition of composition for all businesses in case of multiple business run by an assessee & other service providers (apart from restaurant) should also be removed.
- Settlement of earlier taxation laws disputes through introduction of ‘Kar Samadhan Scheme’
- Registration certificate issued under GST should display actual date of liability and complete name, address and jurisdictional code of the issuing authority. Also if an assessee is having more than one trade then the trade name of all businesses should appear in the registration certificate issued.
- Centralization of Advance Ruling Authority to avoid discrepancies in the order passed by various State authorities.
- Suitable clarification /amendment in law to allow ITC to the works contractors on purchase of machineries which also requires registration under Motor Vehicle Act, 1988.
GST is going to be the biggest Tax reform of this decade and in the coming days it will break all the records of revenue collection in the Country. It will surpass the age old Direct Taxation law of the Country. Agenda of Govt. to make law simpler is really a deciding factor for success of this reform. The dream of One Nation-One Tax-One Market will sooner be a reality in true sense.
Note: The views expressed above are the personal views of the author. Hence it is requested to refer, check and confirm relevant provisions of the laws/circulars/notifications etc. before finally acting based on the above materials. The author can be reached at: [email protected]