Suggestions to Govt to make GST Fair and Transparent

The GST Council has been taking up issues raised from time to time. However many basic issues which have been raised from the time of the Model Law in 2016 June onwards have not addressed adequately. The filing of returns utilities not ready even as on 20th October for filing to be completed by month end is not fair and will inevitably lead to forced extensions. This note has been made on immediate need and those which can be acted on in the next 2 months as under:

Immediate Action needed:

1. Easy method of revision/ rectification of returns till March 2018 needed - no late fee as majority of issue are due to system not upto the mark. Uploaded not submitted well in time are now having to pay penalty!!

2. Trans-1 issues pending as on date [to be filed by 31st October]:

1. Revision option not enabled - 8 working days left!!
2. Offline utility for converting to excel file to match not released - 8 working days left!!
3. Technical glitches- Validation error; pending for process though details entered?; Invoice with error coming- no credit can be availed.
4. CSV File for C forms- not appearing after uploading
5. Trans-1 filed no credit in Register!!
6. Trans-2 deemed credit still not enabled!!

No proper response from GSTN for queries. Help desk mostly non responsive. The industries have been impacted due to the slow down and GST compliance and if they do not get due credit their profit would be eroded. They would simply not pay the SMEs till credit is clearly available after 2 months. This would severely impact the SME who are having a nightmare in complying with the first part of the return- GSTR-1 itself.

Suggestions:

i. Please get all utilities in place and provide a period of 1 month as trade/ industry has to also do business and this type of time wastage is not fair to them. If not sure how much time this would take then fix end of the year for GSTR 2

ii. Provisional credit be allowed based on invoices without need to confirm. Once system stable a period of 2 months be given to do the matching.

iii. Matching insistence itself be deferred/ omitted till March 2018 and after  that only for Rs. 10,000 of credit to be matched and amount reduced every 6 months to Rs. 1000/-. Less than that credit not to be matched.

Trans-1 deficiencies:

• Time limit of 1 year unreasonable. Those who do not have bills can get deemed credit but those who have duty/ tax paid bills cannot avail.
• Capital Goods credit for past years with depreciation for traders/ service providers/ area based exempted manufacturers to be enabled in law.
• Reversal of Credit totally unfair as of now as reverse charge, non taxable also included.
• Aggregate Turnover including exports, exempted, supplies to EOU/ exporters, RCM, services provided outside India, High seas sales, global trade with good not coming into India is not fair and not in line with settled laws like Service tax and excise. To be amended immediately to provide relief to SME.
• New Registration- credit enabled if tax paid for the past.
• Interest for refund be equal to the interest on demand for period of 1 year to ensure swift refund to exporters, 100% EOUs.
• Composition option available for all service providers.
• Centralized registration with condition of providing break up of place of supply for all service providers

Note: At least 2-3 Lakhs will choose to enter the mainstream if 8/9 implemented swiftly . Otherwise they will keep out.

Option to pay GST in case of doubt to replace compulsory exemption to be claimed.

Longer Term Actions [Latest by March 2018]

1. Rate to be bought down to 4 including nil.
2. Amnesty scheme to be put in place.
3. GST payment on advance disturbs the normal accounting methodology and revenue recognition norms internationally.  This would have very limited compliance and those who comply will not find it easy. GST can be only on supply upto March 2019.
4. Blocked credits on Motor vehicles works contract/ construction/ food supply, cab facility to be withdrawn and only to extent used for personal purposes to be denied.  
5. TDS which had very little impact in VAT and non compliers ( did not deduct, deducted late, did not file returns, did not pay as they has no money) mainly Govt, Govt authority and PSUs.
6. Officers to be trained in GST as the vast majority are unable to answer basic questions. If this is not the case let them take a proper examination. Those who would adjudicate and hear appeals to compulsorily go through a special learning and test.
7. Officers to be trained in respect of mindset of trust and supporting to the industry as against tax terror which is prevalent even today.
8. Anti Profiteering maybe scrapped a this is not likely to result in any revenue to the Govt. and would only enrich the intermediaries and the corrupt.
9. POPS - to be amended to see that all transactions of B2B be based on registered place and those on B2C based on the present IGST provisions.
10. Advance Ruling authority was supposed to be a forum to resolve issues- still nowhere in sight. Can businesses stop and wait? Maybe constituted so that there is some place for getting clarity.
11. Help desks working to be reported- how many calls they took and how many issues they resolved. Presently it maybe near zero in reality in most places.
12. GSTN mails received- replied constructively maybe monitored on day to day basis by independent expert.
13. Form for Mandatory audit be given to public as by January such audits can be started which would be useful for the trade/ industry rather than starting after the year end.  
14. The duties and responsibilities and powers of the Officers at various levels be specifically put up for public comment.
15. There could be many more.

The representations made by ICAI in 2016 maybe referred for most of the above issues where they have provided some alternative mechanisms for the issues.

The author can also be reached at madhukar@hiregange.com