How to make it ‘Good and Simple Tax’

Here’s how GST’s pain points can be addressed effectively

It’s been more than four months since GST arrived in India. Now, if you ask any taxpayer or consultant whether GST has lived up to the euphoria over it, mostly they will say ‘no’.

And there are reasons behind this ‘no’. Unless these issues are addressed, GST will never achieve a ‘Good and Simple Tax’ status! Here’s taking a look at the key issues and the likely solutions to resolve them.

Rationalise compliances

Currently, every taxpayer is entangled in a minimum 37 returns on an annual basis. Additionally, there are many other returns to be filed (like GSTR 3B, TRAN 1, ITC-04 etc). Preparing and filing returns of this magnitude on a monthly basis (with a time window of five days in-between these returns) is unprecedented as none of the erstwhile laws enforced such burden.

However, instead of addressing this concern and simplifying compliances, GST authorities are repeatedly negating these concerns stating that it is not three returns per month (outward, inward and monthly return) but one return filed in three phases.

However, the reality remains that the taxpayer is supposed to prepare, validate and file details of outward, inward (including Reverse Charge) and monthly return. Also, each return contains over 12-13 detailed tables and numerous other details. The filing of returns gets more complicated, given the fact that the system is not ready and not enough testing has been done.

Thus, it is advisable that if the government expects taxpayers to file numerous details, then the same can be asked for at the time of annual return and gradually enforced.

Rationalise GST rates

As on today there are more than seven rates (5 per cent, 12 per cent, 18 per cent, 28 per cent, 3 per cent, 0.25 per cent and 0 per cent) for goods and five rates (5 per cent, 12 per cent, 18 per cent, 28 per cent, and 0 per cent) for services. Recently, new rates (like IGST at 0.10 per cent) have been proposed on entities supplying goods to merchant exporters.

Additionally, in GST law, there is not much clarity on classification of goods.

Given this, a detailed HSN guideline (similar to erstwhile excise tariff which was prepared as per internationally accepted HSN) will certainly help the taxpayers. Further, in the long run, GST rates should be minimised and rationalised.

All updates on one site

With regard to CGST, UTGST, IGST and Cess Act, numerous changes have been effected.

Approximately, 200 notifications have been issued in a short span of four months! Further, if all States-related notifications are added, then the number will go into the thousands.

How is a taxpayer expected to understand and implement this law in his business? This problem gets exacerbated due to the fact that, as on today, there is no single website on which all State-related notifications are available!

Additionally, it is worthwhile noting that CGST rules were amended 10 times in the last four months.

In this kind of GST environment, how can a taxpayer understand and follow the law when the notifications and amended laws are not available? Thus, all updated laws, rules and notifications should be made available (in track change mode) for the benefit of taxpayers.

GSTN related challenges

While taxpayers have embraced GST, technical snags are not showing any signs of slowing. Experience of uploading GSTR-3B, TRAN-1 and GSTR-1 is marred by errors, a slow or even dysfunctional system.

Though official details of queries asked and resolved are not available, based on query number generated (when email is sent to helpdesk@gst.gov.in), more than 7 lakh queries have been sent and many more on Twitter/other social platforms. However, how many are successfully resolved is not known. Also, taxpayers are continuously raising questions on new errors and their correction is taking time.

In the light of all this, it is strongly advocated that details of queries raised should be available on GSTN portal and a thorough testing of all return tools should be carried out before making them available to taxpayers for filing.

The writer is a Pune-based Chartered Accountant

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