GST – TEETHING TROUBLES NOT YET OVER
At the outset I convey my greetings to
all my brothers and sisters and wish them
A Happy Diwali and A Prosperous New Year !
The historical economic reforms was introduced from 1st July, 2017 with the ultimate goal of heralding ‘One Nation One Tax’ so as to make exports competitive in the international market. Despite the restrictions announced by the American President, immediately after his election; Indian software exports continue to have their hands full, with work outsourced by various Multinational Companies. It is well-known fact that the Indian cost for the work, is reasonably lower as compared to the corresponding cost elsewhere; therefore, howsoever one may want to reverse the present pattern of the work, it continues to flow uninterruptedly.
2. Reverting back to GST, the experience gained during the last three months were not happy. The primary and basic deficiency was in regard to the working of the GSTN network which is the heart and soul of the GST Regime. Several complaints were echoed from not only migrators for registration but the compilers of Form GSTR 3B for the very first month which consequently affected the latter two months also. That situation resulted in repeated extensions of time limit for furnishing all the formats of monthly returns namely GSTR1, GSTR 2 and GSTR 3 for all the months up to December, 2017.
3. Many taxpayers who desired to make the payments online in accordance with GSTR 3B, could not do so in time because of their inability to get connection of GSTN and have successful login to their network or the monitor displaying ‘error’ at several places. We feel that the Indian mentality of effecting the tax payments only on the last days may be one of the pivotal reasons for the network getting jammed. The number of persons who would use the network ought to have been foreseen while finalising the manner in which the network would function. Ultimately a committee under the leadership of Shri Sushil Modi, the Dy. Chief Minister of Bihar, was appointed to interact with M/s. Infosys Ltd., who were assigned the work of operating and maintaining the network for the whole country. It is reported that after discussions with the committee, the company has requested for some more time say till end of October, 2017 by which time they expect that the network would be on rail with quicker search engines with upgraded capacity. We hope that the same would be efficiently handled in the same manner in which the railway networks have been working since last several years. The railway booking online is now availed by all concerned while sitting at home. Standing in the queue for several hours before the reservation window at railway stations has become a part of the history.
4. The other impediment to the smooth working of the GST Regime, was dissatisfaction sounded by several industries in regard to the heavy burden of taxes as well as increased cost of compliances. The 22nd GST Council – A Constitutional body, met on 6th October, 2017 for considering the remedial measures required to be immediately taken up to remove genuine difficulties faced by the suppliers of goods as manufacturer, trader or importer. Some of the suppliers of services to the recipients from other countries were also in-limbo.
5. It is heartening to note that the GST Council consisting of finance ministers of all the States, (ruled by different political parties) have arrived at a consensus in the true spirit of federalism and the result was welcomed by one and all.
6. The rates on supplies of several goods which were planned to be taxed at the higher rates, were reduced; though not up to the expectations entertained by the concerned industries. The reduced rates on yarn of different base continues to be agitated by the industries because the reduction from 18% to 12% is felt to be not enough.
7. The rates on all types of waste/scrap have been uniformly scaled down from 18% to 5%. Thus the cost of recycling of plastic, rubber, paper, glass and e-waste would be reduced to a large extent when compared to the earlier position.
8. The rates on various job works, have been scaled down to 5% so as reduce the cost of manufacturing for the benefit of ultimate consumers.
9. A big relief is given to all registered persons, in regard to the supplies received from persons who were not registered under the GST Act. Though such supplies, aggregating to ₹ 5,000/- per day was not liable, the Reverse Charge Mechanism u/s. 9(3) of CGST Act, applicable to such supplies, have been temporarily suspended till end of the present financial year on
31st March, 2018. In our view, the said provision was introduced with the intention of bringing many more suppliers who chose to remain outside the preview of the Act though liable. We therefore are of the opinion that instead of succumbing to the pressure from such persons; they should be brought to the mainstream so as not to allow them to harm the national economy anymore.
10. Several hitches faced by the exporters while furnishing letters of Undertaking in place of a Bond have been tried to be sorted out, through Notification No. 37 of 2017 dated 4th October, 2017. Simultaneously a circular bearing No. 8/8/2017 was also issued. Thus all registered persons intending to supply goods or services to their customers from other countries, will be able to do so without payment of Integrated tax as was the position earlier.
11. Prior to the above clarification, the exporters were experiencing shortage of liquid fund due to blockage of their capital resulting from the delay in grant of refund of the input taxes paid while receiving inward supplies. The finance ministers have in that regard announced the decision to the effect, that the refunds so blocked up would be released immediately for the month of July, 2017 to be followed by refunds due for the month of August. This action is a welcome one to ease the difficulties about liquidity in their business.
12. The upper limit for composition is enhanced to ₹ one crore in place of ₹ seventy five lakhs earlier. In this connection the question may arise about the status of the taxes paid during the interim period by those having turnover above ₹ seventy five lakhs but below ₹ one crore. No provisions have been made to grant refund of payments so made.
13. It is stated that 90% of the suppliers would get relief as a result of dispensing with the need of their furnishing monthly returns. Now all suppliers having annual turnover up to ₹ one and half crore will file quarterly returns coupled with the recipient of such supplies (having turnover above ₹ one and half crore) will get the ITC credit for their inward supplies from smaller suppliers. The quarterly returns by such suppliers no doubt will also give good relief to the tax practitioners. They will not be hard pressed with almost continuous pressure of online submissions of monthly GSTR 3B, GSTR 1, GSTR 2 and GSTR 3 and that too within the specified dates.
We hope that in future also difficulties that may be faced by the suppliers would receive similar positive response from the Council. A good beginning is always welcome.
P. C. Joshi
Member, Editorial Board