The Goods and Services Tax (GST) Council might take a lenient view of minor compliance issues during the first six months after the new tax is rolled out and refrain from slapping penalties on taxpayers, revenue secretary Hasmukh Adhia said on Thursday. However, he added that the benign approach would be restricted to “genuine cases” and based on the authenticity of the problems cited by the assessees in complying with the rules. Allaying the fears of increased compliance burden in the GST regime, Adhia said that this was rather a “myth” as just the software used by businesses for the interface with the taxman needed a one-time tweaking. “There would be no requirement of employing more people to file returns,” he said.
On the dreaded anti-profiteering rules, which was notified by the government on Tuesday, Adhia said it would be used as a “brahmastra” or last resort.
Allaying fears of harassment and a return to inspector raj, Adhia said that the council will first exercise the the option of “talking with the industry” against which a complaint of profiteering is received. He added that the structure of the anti-profiteering authority ensures that individual officials aren’t empowered to use their discretion as only the director general of safeguard will be authorised to carry out detailed investigation.
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Given that the GST Network, the IT backbone of the new tax regime, faced short-term glitches during beta testing related to the system’s interface with Aadhaar, Adhia said: “We have temporarily removed Aadhaar linkage for easier migration to GST.”
The official also clarified that except in the case of textile and real estate, all commodities with inverted duty structure — tax incidence on inputs higher than on the final products — will be able to claim full input tax credit.
Moreover, he said, packaged food would not attract any tax unless packaging is done for brands that own trademarks.
Speaking at an event organised by a TV channel, he added that the GST Council would not revise any more rates before the July 1 roll-out of the multi-point tax on value addition but would “continue to consider” more industry representations requesting for rate changes. The council would change rates in future only if deemed absolutely necessary. Acting on 133 industry representations, the council had brought down the rate of 66 commodities earlier this month.
Jammu and Kashmir is likely to suffer double taxation on supplies made from other states if it fails to pass the state GST in the assembly. The inward supply to the state would be levied with IGST as well as state’s own taxes making the supplies more expensive for residents, he said. J&K remains the only state that has failed to pass the SGST Act.