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Making GST less painful for taxpayers welcome PDF Print E-mail
Tuesday, 31 October 2017 03:58
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Shobhana edit

Raising limits for composition scheme for SMEs good but real issue of complicated returns not yet tackled

Given how complicated and cumbersome the GST framework is turning out to be, it is just as well that the panel under Assam finance minister Himanta Biswa Sarma has come up with some major changes to make the tax framework simpler and a lot less onerous for assessees—the GST Council will deliberate on this in Guwahati next month. An important suggestion, which should go a long way in making the new levy easier to work with, is that the ceiling for the composition scheme be raised to Rs 1.5 crore from the current Rs 1 crore. Since more than 90% of assessees are small merchants, traders and vendors, the GST Council would do well to take this view seriously. It is important at this stage of the GST that business not be intimidated by the new system. Indeed, even charging a lower rate, as the panel has proposed for manufacturers and restaurants—of just 1%—is a good idea and should help increase compliance. The government’s objective should be to get as many businesses on board, and if that means giving up some revenues in the short term, it is well worth it. The process of lowering rates continues, and the Sarma panel has suggested the rates for air-conditioned restaurants should be the same as for non-airconditioned ones, at 18% instead of the current 28%. However, the panel continues to be swayed by socialist-era notions that ‘expensive’ goods or those used by the ‘rich’ must pay a higher rate.

So, the 12% rate is applicable only if the restaurants do not avail of input tax credit. Given input credits are an intrinsic part of GST, this distorts the system. The move to lower the levy to 18% for hotels where room tariffs are greater than Rs 7,500 from the current 28% is a good one, but in this case, they are to be allowed to claim input tax credits. Similarly, it is good the panel believes traders should get a relief and the rate for them be cut to 0.5% under the composition scheme—but a needless complication has been retained in the form of a turnover criterion; the 0.5% will apply if the trader takes into account both exempted and taxable items but it will be 1% if only non-exempted goods are considered.

The biggest challenge for assessees, that of filing returns, however, has not been addressed. Of the 60 lakh assessees in July, just 55 lakh filed their summary returns and 45 lakh filed their GSTR1 returns (the sales invoices) and a mere 14 lakh filed their GSTR2 (the purchase invoices)—given the much lower number of GSTR2 filers, there is no way of knowing if the auto-population of data worked; data from GSTR1 gets automatically filled up in GSTR2 forms which assessees have to verify as correct. While the filing dates for all returns has been extended, the GST Council will have to take a view of how to deal with this—the detailed invoice-level filing, as most assessees have pointed out, is proving to be very difficult. Allowing all assessees to file their summary returns and pay their taxes once a month but to file the detailed ones once a quarter—this was earlier allowed for assessees that had a turnover of up to Rs 1.5 crore—is a good idea since it gives the system more time to stabilise and lowers the burden of filing returns.

 

Last Updated ( Tuesday, 31 October 2017 04:03 )
 

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