Unfinished agenda to keep GST Council busy till roll-out

The GST Council has finalised rates for almost all goods and services

With just over three weeks left for the roll-out of the goods and services tax (GST) from July 1, issues related to electronic way (e-way) bill, anti-profiteering guidance and area-based exemption rules, among others, are yet to be addressed.

Though the return filing rules have been simplified, experts argue that such changes just ahead of the GST roll-out will only complicate the IT preparedness of the industry and the GST Network (GSTN).

The revised return rules have done away with the need to mention invoices along with the product code. Now, only the harmonised system of nomenclature (HSN) code of product needs to be mentioned by the seller. In addition, there will be no need to issue an advance invoice if the final supply is made within the same month. 

“While we are appreciative of the simplified revised rules for returns, the industry and the GSTN will need to make changes in the software with just 25 days left for the implementation. The government should avoid making any more changes before the roll-out. After three months of implementation, more incremental changes could be considered,” said MS Mani, senior director, Deloitte. “There are nine million taxpayers, so for every change, nine million changes will have to be made,” he added.

Pratik Jain of PwC India said that with the changes in the rules, the GSTN would have to change the formats and would take some time to do the testing. “GSTN testing needs to be expedited now,” said Jain.

The GST Council, with Finance Minister Arun Jaitley as chairman and state finance ministers as members, has finalised rates for almost all goods and services and simplified transition and return rules. It will meet again on June 11 to take up the unfinished agenda, besides reviewing the rates demanded by the industry. 

The government is considering relaxing provisions related to e-way bill by enhancing the threshold limit and removing inter-state supplies from its ambit. According to the draft rules, moving goods worth more than Rs 50,000 will require prior online registration of the consignment and securing an e-way bill, to check tax evasion by allowing officials to inspect consignments anytime during the transit.

However, the industry is expecting clarity on anti-profiteering rules, area-based exemptions and tax treatment for supply to Jammu & Kashmir ahead of the roll-out. While the finance minister said the anti-profiteering committee will be set up by the GST Council comprising both state and central officials, the industry is looking for guidance will respect to determination of profiteering and the penal provisions. The GST legislation says it will be mandatory for companies to pass on the benefit due to reduction in rate of tax or from input tax credit to the consumer as an anti-profiteering measure.

“Before the GST implementation, the industry needs clarity on how it will be monitored, or how profiteering will be seen with respect to a company or products. Clear guidelines are required for that to plan prices under the GST regime,” said Jain of PwC.

The government is also yet to issue rules for refunds for businesses set up in hilly states and north eastern states that currently enjoy excise exemption. Under the GST, these companies will get  exemption by way of refunds.

“While the return formats and transition rules will make it possible for most of the industries to plan their transition and the IT companies to release the ERP patches for the GST implementation, there are still issues that require clarity like area-based exemptions and SEZ rules that will only be clear after the next meeting,” said Bipin Sapra, partner, EY.