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Procedural Concerns in Focus as GST Completed Two Years Successfully

As the Goods and Services Tax enters its third year, tax consultants and industry groups point to the extreme need to ease the complexity surrounding procedures, especially with regard to registration and return filing, in order to build on the gains of the past two years. According to Mr. Mahendra Singhi, the president of the Cement Manufacturers Association, “In the third year of the GST regime, addressing procedural complexities of the GST portal system, implementation concerns and making compliance easier will further accelerate ease of doing business for the industry in India”. Further, he added, “GST has been one of the proactive steps by the government and the way the concerns are addressed by the Council makes it one of the most effective mechanisms”.

A key highlight of the new indirect tax administration, according to trade bodies, has been the way the GST Council, the central body deciding rates and procedures, has addressed industry’s concerns and modified rules to make the entire system easier. This, according to them, has given Indian business enough confidence that even in a regularly changing tax system, their problems would be eased by the council. According to Mr. Sandip Somany, president of the Federation of Indian Chambers of Commerce & Industry, “Both Central and State governments have taken industry’s concerns into consideration and resolved the same in a timely manner, which gives immense confidence to the business fraternity that we are on the right path”.

While revenue collections in the first two years of GST implementation were totally disappointing, with receipts arrived in lower than foresighted budget and prices falling periodically in response to the various rate cuts announced by the GST Council, the trend in the past few months may bring a turnaround. The months of March, April, and May have each seen GST revenue crossing ₹ 1 lakh crore, an elusive milestone that was achieved rarely earlier. Average annual collections have also got steadied, coming in at a little more than ₹ 89, 000 crore in FY 2017-18 (August-March), touching about ₹ 98, 000 crore for the whole year of 2018-19, and averaging ₹ 1.07 lakh crore in the first two months of 2019-20.

While the proactive manner in which the GST Council has addressed concerns has put industry at ease, there are still some procedural issues that need to be resolved at the soonest. Tax consultants presume that the council’s willingness to make changes to rules and procedures has rendered the current GST quite different from what was originally planned and envisioned.

Originally, it was very simplistic and was based on the threshold limit of ₹ 20 lakh turnover per year. But now, the thresholds have been changed, and it also depends on whether you own a goods business or a services business, where you are located, whether you are based online or not, etc. It is not so easy for freelancers or businesses to quickly assess whether they need a GST registration or not. FICCI too has pointed out the extreme need for simplifying the registration process. According to FICCI, “To reduce the compliance burden for the services sector, there is a need to have centralized GST registration similar to the previous service tax law”. The State-wise registration has increased the cost of compliance… manifold.

Mr. Singhvi, further stated, “We are glad that the government has also partially addressed, recently, among our primary concerns relating to credit notes for post-sale discounts to dealers and we would hope that some of the ambiguity that remains is also looked into soon”. Traders’ bodies, like, the Confederation of All India Traders, however, stated that the announcement made after the latest GST Council meeting that only Aadhaar Card would be required for registration was a praiseworthy move as it would ease the process for low-class traders. Mr. Vikram Kirloskar, the President of the Confederation of Indian Industry, said: “The Indian model of dual GST is unique in the world and represents a paradigm of a partnership between Central and State governments and between Government and industry”.

According to Mr. Adi Godrej, the former president of the CII, said, “In just two years, GST has consolidated and is delivering notable outcomes for the smoother business, lower logistics costs, and easier payment of taxes in digital mode”.


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