Cover Story
Column
GST : A Burden Or Blessing
Krishan
Arora
Karan
Kakkar
While businesses are adapting to the new tax system, the shift to a statewise
registration and monthly compliances has put a load on the service industry
I
t has been full one year since India woke up to
witness what is said to be the largest tax reform of
the country. The new tax was intended to simplify,
standardise and consolidate the overall Indirect tax
structure and ease the taxpayer’s burden. During this
one year, initial anxieties seem to have been soothed
as the industry is continuously learning to adapt to
changes, while the government has been pro-actively
working to smoothen the creases and resolve issues
faced by taxpayers. Standardisation of legislation and
compliances across India has been a boon for traders
and manufacturers who were grappling with separate
compliances under multiple laws. On the other hand,
as opposed to a centralised registration and compliance
earlier, the shift to state-wise registrations and monthly
compliances has increased the compliance burden for
the service industry.
The major focus of GST was to ensure timely filing
of returns through proper technology platform and
faster revenue realisation. The IT platform, considered
the backbone of compliance framework for filing
returns, faced a lot of teething troubles in the first
few months. The government took immediate interim
measures like extension in compliance timelines,
introducing support help desks and creating awareness
through outreach programmes while continuously
updating backend systems.
Initially, GST laws prescribed filing of three-monthly
returns per registration along with one annual return.
Additionally, few specific returns such as ISD and
job work were prescribed. The new tax system also
brought in a ‘self-monitoring mechanism’ where invoice
matching (between supplier and recipient of goods
and services) was of utmost significance to avail input
tax credit under routine compliances. To comply with
Failure of the IT system to
support huge data has deferred
the start of invoice matching
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the same, invoice level data reporting and subsequent
matching of the same with input data of recipient was
proposed to be undertaken on a real-time basis. However,
continued glitches and failure of the system to support
huge quantum of filings led to deferring the whole
matching concept. As an interim measure, taxpayers were
allowed to continue compliances by filing one summary
return and one outward supply return every month.
Another important change proposed was the
standardised e-way bills on a pan-India basis for movement
of goods. The waybills mechanism in the pre-GST era
was state-specific and different practices were followed
with waybills getting generated through different state
portals. After an unsuccessful attempt to introduce e-way
bills, the government made efforts to ensure that the IT
infrastructure was in place for its launch.
Digitisation of compliances, including e-way bills,
has created a mechanism wherein interaction with tax
authorities has now reduced manifold, thereby cutting down
overall lead time and curbing harassment and unwarranted
delays due to administrative issues and red-tapism.
Simplifying the compliance framework has been high
on the government’s agenda and the GST Council has
been actively seeking feedback and suggestions from
various stakeholders. For this, the GST Council in May
this year, gave an in-principle approval for a new return
filing design with a three-phase implementation plan:
First phase (for six months), wherein filing in the
existing Forms GSTR-3B and GSTR-1 would continue;
Second phase (for next six months), wherein a new
return facilitating invoice wise data upload and
claiming ITC on self-declaration basis is proposed to be
introduced; and
Third phase, wherein the facility of provisional credit
is proposed to be withdrawn and concept of matching
would be re-introduced.
Despite the obstacles and turbulences, there is no doubt
that the GST framework has eased the overall complexity
for businesses in processes as well as compliance.
Krishan Arora is Partner and Karan Kakkar
is Director, Grant Thornton India LLP