Presentation prepared by: Society for Tax Analysis and Research (STAR)
Sh. Dheeraj Rastogi ji
Commissioner – GST Council
Member – High Powered Committee on Return filing
Office of the GST Council Secretariat
5th Floor, Tower II, Jeevan Bharti Building,
Janpath Road, Connaught Place, New Delhi-110 001
Reg: Problems faced by assessees in filing of GST Returns
At the outset we humbly thank the government for this wonderful initiative wherein this esteemed committee has been formed to consider the problems faced by the taxpayers in filing of their Goods and Services Tax (“GST”) Returns. GST is believed to be a good and simple tax. A system was for the first time casted by the Government (GST Network (“GSTN”)) to capture billions of transactions that take place in our economy and that too on a monthly basis. However, the professionals and the tax payers have faced multiple problems as the GSTN system was struggling with its own challenges of handling such huge volume of transactions. We are hopeful that with this esteemed Committee in place, the taxpayers and professionals will find respite from their problems with the GSTN issues relating to returns and shall enjoy the ease of doing business. We have highlighted certain major problems and their suggestive solutions for your kind consideration, which are as under:
|1.||Choice of payment of tax by Cash
GSTN has two ledgers – Cash ledger and Credit Ledger. While there is no bar in law to pay part of tax with Cash ledger before using Credit, however, the system does not allow such payment by Cash when Input tax Credit (“ITC”) is available. This has resulted in dual payment in many cases and also there are cases where the taxpayer wished to carry forward his credit for want of certain clarifications, he was forced to utlise the same.
|Payment of tax by Cash or Credit be made as per choice of the taxpayer. However, utilization of Credit ledger may be restricted strictly in the manner as provided in the law.|
|2.||Nil returns also need to complete the entire process
Certain small assesses who have seasonal business or have seen dip in certain month may have Nil return in certain months. In such cases also, the requirement to file all 3 returns and 3B is not warranted.
|In cases where return is Nil, a simple option of nil return if selected should automatically fill nil data for all parts and allow filing in one go.|
|3.||Invoice wise reporting
Invoice wise reporting of B2B transactions has increased the work manifold in case of many businesses. While the same is of no use to any government, as the motive has always been matching of data, such huge amount of detail has caused problems in terms of data submissions and filing. Invoice wise data submission requires precise accuracy in filling details in prescribed format and also increase the file size of data being uploaded to GSTN. This results is repeated failure in uploading large size filed and also limits the capacity of GSTN to handle more data.
|In case of B2B transactions, party wise details of supply and tax along with place of supply be taken and option be given to recipient to either accept, reject, modify, accept in part (as in some cases all supplies might not have been received or for other causes) and while balance may be carried forward in subsequent months. To restrict the misuse / change of invoices, number of invoices issued to other party may also be taken in number.|
|4.||Subsequent return cannot be filed in case of non-submission of previous return
Return of subsequent period cannot be filed if previous return is not filed. This is particularly in cases where the taxpayer has committed an error in submitting details and is unable to pay the tax so computed by the system based on such wrong data. The resolutions of problem happens when the problem is escalated at a mass level. Thereby, while the taxpayer fails to file his subsequent return inviting unwanted interest and penalty, the government looses on the genuine tax payments.
|The limitation of subsequent return be removed in case taxpayer gives a valid reason for non filing of his previous return. Blockage of subsequent return might increase non compliance to a level where even a genuine taxpayer might find it impossible to cope up with the filing of all returns together if the resolution of his problem takes some months.|
|5.||Different Submission and filing requirements: For a taxpayer, till the return is not filed, there is no acceptance of the data he has put into the GSTN. More particularly, the law also requires filing of return without any legal authority given to submission of data which is not signed such data.||There should be no blockage of data submitted till the return is filed. The taxpayer should be able to amend all details till he file the return after payment of tax. In case of any wrong application of tax before filing of return, an option be given to reverse such application of tax or revise the data submitted as before filing of return with valid signature, no such submission is valid and is of legal consequence.|
|6.||Submission of HSN summary
HSN summary submission for both sales and purchases is a problem for many assesses. Many assesses do not have robust accounting software or trained manpower which can provide the requisite details at their disposal. Accordingly, while being a compliant taxpayer, such person shall be considered as defaulter as he failed to file details as required in return (Refer Section 73).
|HSN summary may be deferred for two years till the entire process of filing of returns is smoothened with the taxpayers.|
|7.||Payment of tax can only happen at the time of filing of return
As per the current system, it is only once the entire details are filed by the taxpayer, the GSTN system allows the payment of tax. There are situations where persons who were unable to finalize their returns for want of data from their multiple offices across state are wanting to pay estimated tax to avoid interest liability, such payment is not possible. Thereby, even when the taxpayer wants to discharge his tax liability while collating the information, system itself does not allow such functionalty.
|Payment of tax should be|
|8.||Cross transfer of tax among st CGST, SGST and IGST is not allowed
There have been instances where the taxpayer or his personnel, in sheer ignorance or by fault, pays tax under a different head than required for eg. CGST in place of SGST. The cash while it is lying with government treasury, gets blocked and cannot be used for payment of tax. More so, taxpayers with limited resources find it impossible to deposit tax again. Thus, while the money of the taxpayer is
|An option of automatic refund of money lying in cash account of the taxpayer be given si that any balance lying in cash ledger be credited back to taxpayer by next working day. This requires no checking or scrutiny on part of proper officer as such money has not been offered or applied as tax by the taxpayer and thus, its his own money which he should be able to withdraw and which should be credited in the bank account given in the GSTN by him.|
|9.||Late fees even on days when GSTN is not working or when portal has blocked filing of return
There are instances where the GSTN was not working or when the filing of GSTR 3B was not made available to assessee or GSTR 1 was blocked by the system, in such eventualities also, the GSTN levied late fee on taxpayer for such days as well.
|In case of non functioning of GSTN system for more than 4 hours in a working day or when the return is blocked by the system, no late filing fee be imposed for such day.|
|10.||Non filing of return by taxpayers between the date of ARN and GSTIN
Many taxpayers had found themselves helpless in filing return for period prior to receipt of GSTIN / registration certificate. Most of the taxpayers have undertaken transactions in a bona fide manner considering their purchase and sale valid once they had applied for registration. While in many cases the registration took more than 3 days and taxpayer was to undertake transaction due to different business compulsion.
|Return filing for all new registrations be allowed from July and this mistake be ignored till tax base is settled in GST. This would increase compliance and shall reimpose faith of small taxpayers in the system|
|11.||Safety of taxpayer’s Input Tax Credit (“ITC”) in absence of GSTR 2
Section 16 allows credit of ITC to recipient only when the same is paid by the supplier. However, in case where GSTR 2 is not being filed, the reconciliation system is not available to the recipient to verify his ITC. By the time such system is in place, there are chances that such in genuine taxpayers might elope with taxes paid to them by genuine taxpayers. This gains important when the rate of tax are in the bracket of 12%, 18% and 28% and when cess is also paid.
|Strong monitoring is required of all fly by night operators who have taken registration to defraud genuine tax payers and who shall not be found once the system shall be working in another four months. High value transactions by taxpayers (transactions in a month when found more than 30% of taxpayer’s turnover of preceding year as available in Income tax) be inquired by e-enquiry system (virtual officer) and only when the details are not made available or some suspicious transaction is found, the matter be reported to jurisdictional teams. However, the system calls for parallel safeguards for taxpayers in terms of putting complaints against harassing officers.|
|12.||Missing columns for reverse charge liability in cases where the recipient is not having a GSTIN
There are situations where a recipient who was required to register in GST as he is liable to pay tax under reverse charge (for eg. A Company having exempted turnover of 100 Lakhs making payment to an advocate), fails to obtain GSTIN, it becomes impossible for the supplier to report such transaction in return as the column requires GSTIN of person responsible to pay tax. Such supply can also not be called an exempt supply, else the declaration of the supplier will be found incorrect.
|Only PAN details of such persons be given and in absence of PAN, name and address of such persons should be considered as proper compliance.|
|13.||Differences in decimals in invoice and tax
There are instances where the detail of invoice value and tax as filed in GSTR 1 by the taxpayer is in decimals while the recipient reflects the same in nearest rupee. The same results in a mismatch more particularly in a voluminous data. The identification of such issues requires intelligent IT softwares which are costly for the taxpayer.
|Auto adjustment / rounding off of invoice value or tax to nearest lower rupee value if the claim of the recipient is lower than the supplier detail as recipient has not filled the value in paise in tax.|
|14.||Simultaneous filing of all returns
The spread over 20 days for filing of returns – GSTR 1, 2 and 3 has diverted attention of taxpayer from their business to compliance. The filing of three parts of the return is seen as three returns by taxpayer as each return require attention on a different last date.
|A simpler form allowing taxpayer to file all three returns – GSTR 1, 2 and 3 together on the same date, be given and details of GSTR 1 and 2 be taken as annexure which can be uploaded. Simpler form allowing filing of all details together shall bring respite to the thought process that the return is actually one and not three. Single date compliance may allow them to concentrate on business than compliance.|
|15.||Payment of tax under reverse charge by a Input service distributor (ISD)
In case of an ISD which receive invoice for common input services on which recipient is required to pay tax (eg. fee of an advocate for supply of services to various branches received at head office), no option exists in GSTR 6allowing payment of such tax under reverse charge and distribution of such paid tax to different units. Different methods are being practiced across country to counter this problem like raising invoices, obtaining another registration and then raising of invoice on ISD post payment of tax etc. which is more of a stop gap arrangement rather than proper solution on part of taxpayers.
|Option of such payment under reverse charge and compliance thereof be given as part of GSTR 6 since it is distributing credit to respective units and such liability of payment of tax cannot be distributed under any circumstance to different units.|
We thank you for this opportunity to present our representation on behalf of all members of Society for Tax Analysis and Research(“STAR”). Our Society is a ‘not for profit’ Society which aims to disseminate proper information of tax to masses and to act as a catalyst between government and taxpayers and other stakeholders in bringing an efficient, transparent and corruption free nation. We trust our suggestions would find space in your consideration and report.
For Society for Tax Analysis and Research (STAR)
|(CA Man Mohan Gupta)
(CA Gaurav Gupta)
Chairman – Indirect tax Committee
|(Suresh Aggarwal, Advocate)
(Rakesh Chitkara, Advocate)
Executive Member–IDT Committee