(From left) Amit Mitra, finance minister, West Bengal and Sandeep Jajodia, president, Assocham, at an interactive meeting in Kolkata on Thursday. (Photo: Subrata Majumder)
West Bengal Finance Minister Amit Mitra Tuesday said the GST is leading to hawala transactions as businesses are claiming input tax credit and authorities are not matching those claims with invoices.
Stating that Goods and Services Tax (GST) was implemented in haste on July 1, 2017, Mitra said he had then opposed such hasty rollout as the computer systems were not prepared to deal with uploading of as many as 3 billion invoices.
"Today a short (returns) form is being filled and when you do not upload invoices, according to me, today hawala is happening out of GST. If invoice is not required to be uploaded, when you file GSTR-3B then you claim input tax credit (ITC), which is black money because there was no transaction. It was unprepared GST, Mitra said at the 'Agenda Aaj Tak (news channel)' event here.
Under the GST regime, businesses currently file summary sales return GSTR-3B and final sales return GSTR-1.
Initially, when GST was implemented, businesses were required to fill up 3 forms-- GSTR-1 (sales return), GSTR-2 (purchase return) and GSTR-3 (final return which combines both GSTR-1 and 2).
However, businesses complained of difficulties in filing of three returns a month as the GST systems could not accept the last minute rush on the due date of filing those returns.
Following this, the GST Council, chaired by Union Finance Minister and comprising state finance ministers, decided to come out with a summary sales returns form GSTR-3B for businesses to pay taxes by the 20th day of the succeeding month.
The system of filing GSTR-3B and GSTR-1 does not require businesses to upload invoices to match purchase and sales returns.
While GSTR-2 and 3 has been kept in abeyance, the tax authorities are working on simplified returns forms which should be launched sometime in 2019.
"I had said that GST should not be launched on July 1, 2017. Computers were required to process 3 billion invoices, but there was no testing or pilot run," Mitra said.
GST, which amalgamated 17 different central and state taxes including excise duty and sales tax or VAT, not just made India one market by levying a uniform tax rate on a good or service, it also did away with tax-on-tax prevalent in the previous system.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.