“Ease of
Doing Business’’ - the only pillar of GST is keeping the business concerns
eagerly waiting for its roll out. Although we are optimistic that GST would
make life easy for business units in the term of unified market, competitive
suppliers, removal of cascading effect, reduction of multiple taxes and so on. But
the Model GST law shows the flip side of the story as well.
With
business units expected to take registrations at every location from where the supply
is affected, it looks like that it will bring an additional burden on them.
There is no centralized registration available under GST. More so only
registrations will not suffice; even the self supplies would be taxable under
GST. This would certainly lead to working capital blockage. We understand that
this provision has been introduced in order to maintain the credit chain and to
monitor each and every supply. But to certain extent it may prove harsh for the
businesses which have high gestation period.
With the
introduction of GST, every taxable supplier has to file at least 37 returns in
a year. This might prove to be a heavy compliance cost for small business
units. Although returns are auto populated and have to filed online, but the
reality is majority of business man are not educated enough to tackle the
mismatch, ITC issues themselves. In such a situation an external consultant is
likely to gain more. If a business unit is a supplier with an e-commerce unit,
it has to compulsorily take registration under GST. No minimum exemption
benefit is available to these small units. Since e-commerce giants have been
able to give them some business it is likely to fade a little once GST comes
in. These e-commerce units will prefer to have their own mother warehouses rather than
making tie-up with small business concerns.
They say
that GST will be taxpayer friendly and a huge importance is being given on
trusting the taxpayer. They have even announced that only 5% of the cases will
be selected for audit purposes. With around 10 audits introduced in model GST
Law at various levels, it is unlikely that the life of a business unit would
become easy. The concept of self assessment will just remain a concept
practically. Indirect tax revenue authorities usually have a mindset that each
and every taxpayer has malafide intentions. This transformation from audits to
self-assessment regime requires a huge behavioral change to be introduced.
The
arbitrary powers of the assessing officers at the time of assessment
proceedings will prove another hitch for the business unit to accept GST in its
right spirit. As per law, if the proper officer has reasons to believe that you
have adopted the wrong valuation for paying GST, it can reject the same and go
on with his own valuation. In such a scenario it is unlikely that corruption
will go away.
Under GST,
refunds of taxes paid would also not be easy. Only in two cases where there is
inverted duty structure or exports, refund would be granted. In the cases where
the transactions have not materialized or the customer has returned the goods,
no such refund would be allowed. There could be number of transactions like
return of samples, sale on approval basis, non-materialized advances etc. which
would lead to accumulation of input tax credit rather accumulation of working
capital which will never be refunded. In such a scenario government should ease
refund rules and ensure whenever a refund application is made it should be
disposed off in time bound manner like it is being done with income tax refunds.
Since GST is
a digital tax regime, it is important that government should launch campaigns,
make kiosks and other instruments in order to educate more and more citizens of
the country. This is required with immediate effect at least in the north
eastern part of the country. Subsidies
and other benefits should be granted to the training institutes for departing
GST knowledge to less privileged segment of the society.
By finding
out the problems and issues in GST, we by no manner disapprove that it will not
be in the benefit of the business units. But there are few anomalies which the
government should do away so that GST makes doing business easy in real sense.
by:
Keshav R Garg
(B.Com, FCA, CS,
ISA (ICAI))
Faculty for GST:
Indirect Tax Committee of ICAI
Author: Bharat's
GST Ready Reckoner
A Handbook on GST
Adviser for GST:
Industries Association of Chandigarh
Member: Indirect
Tax Committee of CII, PHDCCI, MyGst.MyTax Foundation
Address: 3328,
Sector 27 D, Chandigarh, India - 160 019
Phones:
+91-172-461-3328, +91-98880-90008
Mails: mygst.mytax@gmail.com, keshavgarg@kdai.in
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