prpri Impact of Unsettled Taxation Components on GST Compliance Impact of Unsettled Taxation Components on GST Compliance

Soon after becoming a democratic nation, India implemented the taxation policies and started complying with it. Initially, there was a multiplicity of taxes as the taxation included Value Added Tax (VAT), excise duty, service charge and few other taxes. The government, at that point in time, had levied a different tax for different types of purpose. But the face of the Indian taxation has been changed in the recent past. Almost nine months ago, the government implemented the Goods and Services Tax Act in India. And this new taxation regime incorporated all the earlier taxes under one head.

But unfortunately, the Goods and Services Tax Act hasn’t been able to deliver the results that the government had expected. However, the factors causing hindrance to the regime are many. Most importantly, the complexity of the taxation regime became a major element that suppressed the revenue collections and also baffled the taxpayers. Would it be possible for you to spend most of the time in the taxation processes and still make the business grow? It might sound easy but it actually takes blood, sweat, and tears to equally focus on the business as well as GST. Before proceeding with the shortcomings of GST compliance India, let’s first know about the factors affecting the revenue collections:

1. Stagnant refunds- The Indian businesses, especially the ones involved in the exports, have suffered drastically due to the lack of capital in the business. The only reason the problems prevail these businesses since the implementation of the regime is the blockage of refunds. However, the government has a valid reason for not crediting the refunds to the businesses. After cross-checking a considerable amount of returns filed by the taxpayers, the government found most of them incorrect. And the main issues with the returns were:

  • The highly manipulated sales invoices.
  • The hiked input tax credit claims.

Hence, the government had to temporarily block the refunds. But surprisingly, the Central Board of Excise and Customs released around INR 15,000 crores of refunds on the manual basis. The rest of the taxpayers would have to bear the inconvenience caused by the delay until the government resumes the verification and refund process.


2. Jumbled taxation categories- India is a homeland to the businesses ranging from the big to small ones. And since India is a developing nation, there is an abundance of MSMEs (Micro, Small, and Medium Enterprises) throughout the nation. But the government overlooked the fact that every business, for obvious reasons, has to get involved with the hierarchy of businesses in order to sustain in the market. As per the rules of GST compliance, as a business, you would have to make sure that every transaction is levied under the right taxation category. And the burden adds up when you have no idea about the tax category and you end up exploring it. Such activities consume most of the time of the businesses. Sometimes to avoid such unnecessary time consumption, the businesses adopt wrongful measures to escape the taxation. The deceitful measures not only put an adverse effect on the revenue collections but also make the honest taxpayer suffer throughout the process of taxation.

3. Complex GSTRs- The GSTR forms are the backbone of the entire taxation regime. If you are a registered taxpayer under the Goods and Services Tax Act, then you are required to comply with all the GSTR forms in order to file error-free returns. But what obstructed the taxpayers from doing the same? Unfortunately, the GSTR form is a multi-page document. And the multiple pages of the form not only panicked the businesses but also made them miss the GST payment dates. However, the government has decided on some measures to modify the GSTR form into a single page document. And not only that, the government has also decided to provide the taxpayers with the benefit of filing only one form in a month. And that form would be GSTR3B (summary form).


As of now, the taxpayers are in a dire need of a simplified version of the Goods and Services Tax Act. Although the government is trying to make things easier for the taxpayers of the nation, the problems related to the compliance doesn’t seem to end. The government, instead of focusing on the implementation of the processes like the e-way billing system, should make the process of returns filing easier. Putting efforts into making the process easier that have current relevance would be a sane thing for the government to do. This would also make the government prevent the Indian taxation system from any sort of catastrophic situation. Because if in case GST fails in India, pulling it from the swamp of difficulties would become inaccessible.

Author Bio

Name: Tapan
Qualification: Graduate
Company: GST Keeper
Location: Noida, Uttar Pradesh, IN
Member Since: 24 Feb 2018 | Total Posts: 3

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August 2021