GST: Knots yet to be untied

The Goods and Services Tax (GST) Council has eased procedures to help small and medium industry players, but assessees still face problems in filing returns. This was reflected in declining tax collections, though other factors such as rate cuts and use of integrated GST (IGST) also played a part in subdued collections, particularly in October and November. 
 

The number of filers has been rising. However, the proportion of filers to assessees kept dwindling before it rose again in October and reached the level of July in November. Also, filers have not been able to file the correct amount of taxes and input tax credit due to complicated filing procedures.

ClearTax Chief Executive Officer Archit Gupta said there should be changes in the format of GSTR1, a form for filing supply returns. For instance, it asks assessees their expected turnover, which is difficult to answer, particularly for small and medium enterprises. If a trader opts for monthly returns, he cannot go back to filing quarterly ones. Similarly, he said, GSTR3B asks tedious questions — a summary form for input-output returns. For instance, it asks filers if they have reverse input tax credits. 

Sudhir Singh, managing director of Marg ERP Ltd, said companies were still dealing with teething troubles. “Transition is still in process; it is not yet complete.”

 

Vishal Raheja of Taxmann said the due date for filing GSTR-1 was January 10 for all assesees irrespective of their turnover being above Rs 1.5 crore or not. But, the GSTN portal was opened for this filing just two weeks ago and many businesses would not be able to file all returns before this deadline. 

The government is assuming that businesses would upload the invoices on the portal on a day-to-day basis. But, small- and medium-sized businesses are not equipped with information technology resources to do this. 

The GSTN portal had crashed in early September when the filing of returns were on for July. Raheja said it was expected that the portal would work smoothly but it was still not free of glitches. “The summary of GSTR-1 return is still taking too much time to generate and figures are not reflecting on the portal instantly. It is taking several hours after uploading. The government should ensure that all these difficulties are removed to make it more compliance-friendly.” In fact, the government extended the deadline for filing GSTR-1 for the first four months of the GST roll out by 10 days to January 10.

Pointing to the November GST collections, which fell to the lowest in the first eight months of the roll-out, M S Mani of Deloitte said: “While the decline on account of rate reductions is understandable, the fact that there is a decline in compliance would be a matter of concern.” 

The Council had eased many procedures. For instance, it allowed those with an annual turnover of up to Rs 1.5 crore to file returns and pay taxes quarterly from October, raised the eligibility for composition scheme from Rs 75-lakh annual turnover to Rs 1.5 crore. It also cut GST rates for those under the composition scheme. The Council also put off filing input returns and input-output returns till March 31, 2018. 

 

Meanwhile, a committee headed by GST Network Chairman A B Pandey was tasked with simplifying these forms. The committee is also looking into modifications in procedures, including changes in rules, laws and format in filing returns. 

Pandey had said, “We are discussing with experts and taking opinions from various other stakeholders as to what simplification could be achieved. The whole idea is that people who are nil filers, who have no sale, purchase transactions, have taken a registration for some future use. They should be able to file GSTR-1 and GSTR-3 by pressing just a few buttons. That is our ultimate aim." 

As many as 40 per cent of the businesses filing returns on the portal have nil tax liability. The report of the committee is likely to be discussed at the next Council meeting, in January.