GST returns: Tepid response prompts govt to conduct survey on urgent basis

With lower-than-expected returns filed in the first two months of the goods and services tax (GST) implementation, the government will conduct a survey on an ‘urgent’ basis to to assess the reasons behind the muted response.

Revenue Secretary Hasmukh Adhia in his letter has asked central and state commissioners to conduct a five-question survey to gauge the reason for slow filing of returns.

“The response in filing of returns is not as per our expectations.  Through the survey, we will ask entities about the problems faced by them, so we could quickly fix these,” said a senior official. 

About 63 per cent of eligible payers have filed the summarised return, or GSTR-3B, for August; 82.6 per cent did so for July. Of the 7.3 million eligible ones, 4.6 million filed the summarised return for August.

“It is understandable that in the initial months, taxpayers didn’t have full knowledge of how to file returns... However, we need to exactly find out why there is a delay,” Adhia said in the questionnaire sent to GST officials.

The survey will be based on a sample of 200 taxpayers who have not filed GSTR-3B.

“As a matter of great urgency, you are requested to share the responses within the given timeframe,” the letter added. 

Last week, the GST Council, chaired by Union Finance Minister Arun Jaitley, eased compliance rules for small and medium enterprises. Those with annual turnover up to Rs 1.5 crore will from October onwards only need to file returns and pay taxes quarterly. It also raised the eligibility limit in terms of annual turnover to Rs 1 crore from the current Rs 75 lakh for the composition scheme, which allows a flat rate and easy compliance. The window will be open till March 31, 2018.

The options to the question on why they did not file GSTR-3B include site was not functioning, filing process was too complicated, system didn’t allow me to file nil return, could not preview return details before filing returns. In addition, the tax officers will take suggestions for improving returns filing process. 

Assessees are required to file and pay taxes only quarterly under this scheme. A trader pays the GST at one per cent, a manufacturer at two per cent and a restaurant owner at five per cent, but they are not allowed input tax credit.  About 90 per cent of taxpayers under the GST have annual turnover up to Rs 1.5 crore.

“We will have to wait for October 11 onwards when GSTR-2 filing starts to see if there are issues,” said Pratik Jain of PwC India.

Just over half of eligible taxpayers filed the GSTR-1 or detailed sales returns till October 8, two days ahead of the filing deadline. This prompted the GST Network, the information technology backbone, to send reminders to close to 1.7 million which filed the summarised return but not the detailed return, to do so.

Of the 6.5 million registrations in July, only 55 per cent or 3.6 million taxpayers have filed the GSTR-1 return so far. The deadline was extended by a month to October 10 in the GST Council meeting held in Hyderabad.