A habitual deferment of compliance to the last minute by big businesses is the principal reason behind the GST Network systems coming under strain on Monday, the day before the earlier deadline for filing the details of sales invoices (GSTR-1), a source privy to the situation said, adding that the GSTN’s capability to handle traffic is indeed more than satisfactory. Between July 24 and August 29, only 36 lakh GSTR-1 invoices had been uploaded on to the system compared with the estimated 3 crore monthly bills the goods and services tax (GST) base would generate. In the week before Tuesday, taxpayers inundated the GSTN portal with over 2.5 crore invoices, causing it to wobble and compelling the government to a give a special window till September 10 to file the first of the triplicate returns (GSTR-1).
The portal is capable of handling 60,000 taxpayers at a time. The deadlines for filing GSTR-2 (inward supplies) and GSTR-3 (aggregate details of input tax credit) too were extended by 15 days each to September 25 and 30, respectively.
“The big businesses which generate lakhs of invoices every month need to develop the habit of uploading invoices periodically if not daily. If they wait for the last few days, it will crowd out the system, and make smaller businesses suffer without any fault on their part,” the source said. He added that deadline extension may provide immediate relief to taxpayers but businesses needed to adapt sooner for system to run smoothly in the long term.
To be sure, the novelty of the return-filing process has also contributed to a general sense of confusion among taxpayers. “There are cases where assessees have paid more tax than required as they aren’t sure how to calculate the exact amount. Many taxpayers failed to fill out TRAN-1 and TRAN-2 forms, meant for claiming transitional credit, as it proved to be too complex and elaborate for assessees,” Archit Gupta, CEO of ClearTax said.
Although revenue collection under GST for July exceeded government’s own internal assessment, some tax experts feel a lot of taxpayers weren’t able to calculate their tax liability correctly. On August 29, over 64% of 60 lakh eligible taxpayers had filed returns using the interim summarised GSTR-3B form for July. The total GST revenue to government under different heads till that day was Rs 92,283 crore.
Also, while tax experts have by and large welcomed extension of the deadline, they are wary that it may not be enough as taxpayers are likely to take longer to adjust to the system.
“Big corporations with large number of invoices are wary of uploading all of them on the GSTN portal without proper scrutiny. In the case of most firms, only a tiny portion of invoices may need amendments but the process holds up the upload of the rest as well. Also, most chief financial officers of the firms give approvals closer to the deadline than earlier. Besides, there are companies with invoices coming from different verticals that use different ERPs. These processes are expected to be expedited over a couple of months making companies capable of uploading invoices right from the start of the month,” Rajat Mohan, partner, AMRG and Associates said.
“Given the magnitude of data and issues in hand, extension of five days in filing of GSTR 1 for July may not be sufficient. We have requested the government to continue with GSTR 3B (summary return) till December 2017 and extend the timelines for other returns till such time. Since tax would be collected on a monthly basis, revenue will not get impacted. This will give adequate time to the industry as well as GSTN and the government to sort out the glitches in their respective systems and processes,” said Pratik Jain, partner and leader, indirect tax, PwC.
Meanwhile, after Navin Kumar retired as the chairman GSTN on July 29, revenue secretary Hasmukh Adhia has taken over as the interim chairman. A search committee formed by the government is looking for Kumar’s replacement.