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  1. A 7-point guide to make GST good and simple

A 7-point guide to make GST good and simple

It’s been three months since the GST regime came into effect in India, but he new complex tax system is getting increasingly difficult to implement. Unless immediate steps are taken to make GST user-friendly, GST will end up being a disaster.

By: | Updated: September 28, 2017 1:41 PM
GST returns filing, gst, GST law,  GST Network, GST Council, TRAN-1, VAT, GST puzzle, gst tax regime, KPMG in India It’s been three months since the GST regime came into effect in India, but he new complex tax system is getting increasingly difficult to implement. (Image: Reuters)

It’s been three months since the GST regime came into effect in India, but he new complex tax system is getting increasingly difficult to implement.  Even as the government looks to resolve the glitches of the GST Network, dealers using the network continue to grapple with technological issues on the portal. In an article featured in the Indian Express, Arvind Datar and K Vaitheeswaran, two practicing advocates, have come up with a not-to-do list for making GST ‘good’ and ‘simple’. We take a look at them-

E-Way Bill implementation

According to the authors, the e-way bill must be postponed by at least a year as the existing electronic system is ill-equipped to handle the load, if every movement of goods requires access to a portal for generation of an e-way bill. The experts observe that most transport operators have only a few trucks and it will be cruel to inflict this torturous system on them when the Centre and states are ill prepared.

Monthly Returns

Filing of GSTR-3B return which is a monthly summary, must be be continued for a year till the electronic infrastructure is improved. The experts advice that the current provision to file 36 monthly returns per year per state should be dropped.

Matching of Invoices

The current system of matching of invoices places huge burden on the electronic infrastructure and entail huge compliance costs for the small and medium sectors. Further, the advocates observed, “This system does not exist anywhere in the world and there is not a single logical reason why this should be implemented in India.”

Impact on exports

The export sector has borne the maximum brunt inflicted by the GST regime. An exporter has to execute a letter of undertaking subject to eligibility or a bond with bank guarantee just to export. The government’s promise of instant refunds have not materialised to the detriment of exporters. According to the experts, the earlier process wherein, merchant exporters could procure goods without tax must be restored.

Apart from the above list, the experts suggest a few points to make GST business-friendly.

A flat GST rate for small businesses

A flat-tax GST rate of 10% on all businesses with a turnover of upto Rs 2 crore regardless of the product or service, will give a good boost to the growth of goods and services, while eliminating huge paperwork and electronic overload.  Further, the authors the authors advise that the GST paid thereon should also be eligible for input credit.

Stop frequent revisions

The experts point out that there have been seven amendments to the CGST rules in a span of less than three months, adding to the confusion. Further, they say that the FAQs, published at great cost, must be binding on the Centre and the states as they ensure pan-India certainty.

Have maximum GST of 18%

“The multiple rates of taxation and an elaborate classification system are bound to lead to classification disputes. It is imperative that classification is shrunk to three or four categories with not more than three applicable rates,” say the authors, adding, “having a maximum GST of 18 per cent will result in substantially more revenue than the present complex system of higher rates of taxes.”

Unless immediate steps are taken to make GST user-friendly, GST will end up being a “disaster”, say the advocates. “The present GST system, like socialism, sounds wonderful in theory but is completely unworkable in practice. It is dangerous to proceed with the hope that things will eventually settle down,” they caution.

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