(1) Implementation of GST Act w.e.f. 1st July, 2017 has completed 2 years by now. The Government is trying to solve the queries and seriously considering the complaints/suggestions made by the taxpayers and endeavour to simplify the provisions of GST Act and its Rules and have already reduced the rate of tax on certain items also. For this purpose, the GST Council has held 37 meetings till date and made suitable changes under the GST Act and its Rules. It is claimed by some of the economists and traders that, the rollout of Goods and Service Tax (GST) on nationwide basis on 1st July, 2017 and its high rate of taxes has resulted in present slowdown in the Indian Economy.
(2) At this juncture, we humbly suggest that, there is a need to do away with input tax credit provisions at the option of all the dealers by keeping low rate of tax to be levied on every transaction of supply of goods and services under the Goods and Services Tax Act, 2017, like Composition Scheme, for real simplification and for eradication of issuing bogus/ fake bills for claiming wrongful ITC. There will be no fear of cascading effect because even at present no dealer is passing the benefit of Input Tax Credit (ITC) to the end consumers by reducing the prices of their goods and services to the extent of input Credit received by him. There will be no necessity to claim input tax credit and to issue tax invoices for claiming input tax credit by the dealer/s. For example, in case of Telephone Bill higher rate of 18% GST (9% of CGST and 9% of SGST) is charged but the common man being not registered under the GST Act he will not get Input Tax Credit for the same. Similarly, in case of all the items of goods and services supplied for residential use, the end consumers have to pay higher rate of tax with the result inflation takes place and consequently there is a slowdown in the Indian economy.
(3) Our above suggestion is similar to that of the Composition Scheme under the GST Act, 2017. Under the said scheme with effect from 1st April, 2019 only the small dealer/s having annual turnover up to ₹ 1.5 Crore, has an option to select the Composition Scheme under which he is not entitle to claim input credit of taxes paid by him and he has to charge lower rate of tax to the end consumers. Further, such dealer is not entitled to issue tax invoice like other registered dealers under the said GST Act. However, different category of dealers have to pay a lower rate of tax on their sales at the flat rate, as prescribed under the Composition Scheme of the said Act.
Further, under the said Composition Scheme, the taxpayers are not required to file monthly returns under the GST Act and are also not required to give the particulars of the purchases and services for claiming the set off of the Input Credit of Taxes paid. They are required to file one annual return and four quarterly returns only. The compliance under this scheme is easy and no tension for any disallowance of the claim of Input Credits like other registered dealers. They know their tax liability under the GST Act beforehand and once they have paid the above prescribed flat rate of tax, in time, they have not to pay a single rupee more as GST to the Government. Thus, they know their tax liability under the GST Act, in advance and can do business peacefully, without any headache for keeping various details of records to prove the claim of Input Tax Credit for taxes paid by them. In fact, the eligible taxpayers are encouraged by the Government to avail the benefit of the Alternate Composition Scheme by extending its last date for applying for the same. In short, the implication of the above suggested composition scheme, at the option of all the dealers, will reduce the inflation in the market and end consumers will be benefited by paying less rate of tax. Further, it will be easy and better for the Government to collect the revenue also. There will be no scams for the claim of Input Tax Credit by issuing bogus tax invoices as often reported in newspapers from time to time.
(4) In case of other registered dealers, if any vendor fails to pay the tax collected from purchaser by him to the Government for any reason whatsoever, the purchasing dealer will not get input credit to that extent. Therefore, more and more dealers will opt for the Composition Scheme as suggested above.
(5) Hence, we suggest that, the Composition Scheme at the option of all the registered dealers (whether big or small) be permitted, if need be, imposing little higher flat rate of tax on different goods and services, as may be thought fit by the Government. Such flat rate of tax may be increased and/ or decreased from time-to-time at the end of each financial year, as per the required revenue collection under the GST Act, 2017 and we are sure that the dealers/ taxpayers, whether small or big, will opt for the Composition Scheme that may be prescribed by the Government for all the taxpayers as suggested above. There will be no necessity of complex audit of matching of every purchase bill/s with the bill/s of the Vendor/s for verification of the purchases and services and/or tax invoices for verifying the claim of correct input credit of taxes paid by the Dealer/s.
(6) In short, for real simplification and difficulties faced by the taxpayers under the GST Act, 2017, there is a need to do away with input tax credit provisions, by keeping low flat rate of tax to be levied on every transaction of supply of goods and services. Hence, there will be no temptation to do wrong by not issuing sale bill/s or by issuing fake/bogus and unaccounted sale bill/s. Further, there will be better tax compliance and no chance of revenue loss, on account of giving wrongful input tax credit and/or input tax credit in respect of bogus bills.
(7) We humbly further suggest that to simplify the provisions of present GST Act, 2017, instead of SGST, CGST and IGST with their respective rules and procedures there should be only single GST by fixing the percentage of GST revenue to be shared/divided between state government and central government from time to time. Hence, we request the GST Council, State Governments and Central Government may kindly consider the same to make good the complaints of hardship suffered by the dealers and to achieve the goal of real simplification of GST Act, 2017.
(8) In the 33rd Meeting of the GST Council held on 24th February, 2019 at Delhi, the then Finance Minister Late Mr. Arun Jaitley felt that the benefit of Input Tax Credit (ITC) was not being passed on to the flat purchaser/s by the builders and developers. Hence, the GST council has at the option of the such dealers reduced the tax rate from 12% to 5% etc., and not to grant Input Tax Credit (ITC) to such dealers with effect from 1st April, 2019. In such a case, the benefit of ITC will be automatically passed on to the Flat purchasers.
(9) Similarly, the end consumers have also felt that, the benefit of Input Tax Credit is not being passed on to them mostly by all the dealers. Consequently, the consumers have to pay higher percentage of GST of 12%, 18% and 28% from their own pockets, without the right of claiming the benefit of the Input Tax Credit as they are the end consumers, for the simple reason that they are not the dealer/s under the GST Act.
(10) Therefore, there is a need to do away with input tax credit provisions and to reduce the tax rate/s, in all categories of business as is done in respect of real estate sector. In such a case, there will be real simplification of the provisions of the GST Act, 2017 and there will be no scam/s of Crores of rupees by issuing fake Tax invoices by bogus dealers and there will be no fraud on this count, as reported often in the newspapers.
(11) In short, in order to make the provisions of the GST Act, 2017 more simplified, there is a need to do away with input tax credit provisions altogether, by keeping low flat rate of tax to be levied on supply of different goods and services.
“In a day, when you don’t come across any problems – you can be sure that you are travelling in a wrong path”
— Swami Vivekanand