Monday saw the top-brass of the central bureaucracy going into a huddle to chalk out a strategy for managing the goods and services tax’s transient disruptive nature. While Cabinet secretary PK Sinha held a review meeting and asked the secretaries of various departments to give their feedback on the roll-out of GST, the day also witnessed sporadic protests by unorganised-sector businesses at some parts of the country over the hassles and alleged extra costs due to the newborn tax. Some state governments like Tamil Nadu moved to ensure that traders don’t resort to “overcharging”, using GST as a pretext. Stock markets, however, cheered the levy that seeks to ensure that in B2B transactions, only the value added is taxed – the Sensex closed about 1% higher. The finance ministry said as many as 22 states have abolished their border check posts thanks to the GST.
On Sunday, the revenue secretary Hasmukh Adhia had tweeted to bust the “myths” about GST to state, among others, that there is actually only one return a month to be filed by each assessee — when first part is filed by the dealer, the two other parts get auto-populated by the computer — and that invoices can be generated manually too (Internet will be needed only to file the monthly return). However, tax experts told FE that GST compliance may require businesses to deploy more manpower for accounting purposes; they may also need to shell out more for “online solutions” like filing returns.
For instance, a manufacturer will have to record every line item that could run into tens of thousands in a month. Although, since this would be done online, a firm may have to dedicate manpower for making these entries and keeping track on returns filed by supplier for reconciliation. “The requirement of manpower and online systems wouldn’t translate into a cost for big businesses but it could be a source of pain for small and medium enterprises,” Rajat Mohan, director of indirect taxation at Nangia & Co said. He added that nearly 80% of small businesses, which use accounting solutions from Tally Solutions in the previous regime, will have to shell out nearly `25,000-40,000 per annum additionally as user charges.
The meeting convened by the Cabinet secretary saw participation from about 20 secretaries, including Adhia. All the top brass of the Central Board of Excise and Customs were also present. The finance ministry had on Sunday said the two days of GST roll-out had passed “without any major problems being reported” from the field offices. “The revenue department has got encouraging reports from the roadside dhabas and big restaurants as well as from kirana shops to departmental stores which, in turn, have started getting acclimatised to the new tax system,” it had said.
Also, the government on Monday allowed fertiliser companies to print revised MRP by including the new GST rate on existing unsold stocks of about 10 lakh tonnes, with some riders. The companies have been given three months till September to clear the unsold stocks by stamping or printing the new retail price. Last week, the GST on fertilisers was reduced to 5% from the 12% originally proposed in the interest of farmers. Chartered accountants, cost accountants and other professional service providers would be required to maintain invoices, credit and debit notes, sources said.
They would need to get their accounts audited for compliance under the GST regime. According to the sources, the compliance burden would be felt more by service providers as they are required to register and file return in each state of operation. The demand from service providers with businesses of essentially inter-state nature like telecom and financial services for a single-registration system was not accepted by the GST Council. This is substantially more than the requirement of biannual returns to be filed from one centralised registration in the service tax regime. However, excise and VAT asseesses seem to find compliance easier than earlier.