The GST Council Meeting is all set to begin today in Assam’s capital Guwahati, even as traders and businessmen alike will hope get some respite as the government looks to further amend tax rules to fix glitches in the new indirect tax system. It’s been more than four months since the introduction of the new tax regime, and many concerns remain over its implementation, ranging from multiple taxation rates and GST network issues. Prime Minister Narendra Modi has often termed GST as ‘good and simple tax’, adding that it will put an end to harassment of honest traders and small businesses while integrating country into one market with one tax. Yesterday, Bihar deputy chief minister Sushil Kumar Modi, who is also a member of the GST Council, said tax rates on 80% items of top 28% slab are likely to be slashed at the council’s meeting starting Thursday. We take a look at four key areas which the council must take into account to improve GST.
The current process of filing GST returns is too cumbersome and places huge burden of compliance. Problems range from difficulties with using the HSN Code (Harmonized System of Nomenclature) and filing the returns using GSTR forms. Businesses have to file returns in GSTR-1, GSTR-2 and GSTR-3 forms for every month. These forms detail outward supplies of taxable goods and/or services, inward supplies for claiming input tax credit and monthly return. Businesses have complained of trouble in invoice matching while filing GSTR-2. The current system of matching of invoices places huge burden on the electronic infrastructure and entails huge compliance costs for the small and medium sectors. Two practicing advocates Arvind Datar and K Vaitheeswaran wrote in a recent article with the Indian Express , “This system does not exist anywhere in the world and there is not a single logical reason why this should be implemented in India.”
Simplify Tax Rates
Traders and small businessmen have often pointed out that they find the GST structure and the various slab rates to be complex. In an email response to FE Online, Vijay Kalantri, President of All India Association of Industries (AIAI) said, “All India Association of Industries (AIAI) has been repeatedly communicating on that the GST structure has too many tax slabs. Such multiple tax slabs in the similar and allied products and services has created confusion and resulted in higher rates.” Multiple rates results in more complexity in compliance/return forms. This is the exact opposite of GST and the basic premise of ‘One Nation one tax’.”
Lower Tax Rates
“The high GST rates are affecting the purchasing power capability of people at large as GST comes from the post-tax income. This in turn has (resulted) in lower demand and thereby hurting the manufacturing activity,” said Vijay Kalantri. In fact the tax rates can be higher for different units within the product category. Mahinder Aggarwal, President of All Delhi Computer Traders Association points out, for example, that within the business of UPS (Uninterrupted Power Supply), some of the units have 18% GST while the tax rate is higher at 28% on others. He says that this has created a lot of confusion in billing of the items for traders and businessmen. Advocate Arvind Datar writes, “Having a maximum GST of 18 per cent will result in substantially more revenue than the present complex system of higher rates of taxes.”
Stop frequent revisions
Arvind Datar and K Vaitheeswaran 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.