The Goods and Services Tax
(GST) Council, in its 27th meeting on May 4, decided on a move to a single monthly return to be furnished by the seller. And, to make GST
Network (GSTN), the levy's information technology
backbone, fully government-owned. It sent the issue of levying a cess on sugar and incentivising digital transactions to a group of ministers. The problems of exporters were not even on the agenda.
The return simplification process envisages one monthly return for all taxpayers, barring exceptions such as composition dealers, and to stagger filing return dates based on turnover of the registered entity, to manage the load on the GSTN system. Also, quarterly returns for composition dealers and those having no transaction. There will be unidirectional flow of invoices that sellers may upload anytime during a month, valid documents for the buyer to avail of input tax credit. Buyers would also be able to see the uploaded invoices anytime during the month. There will no longer be a need to upload purchase invoices.
HSN (Harmonised System of Nomenclature) Codes at four-digit levels must be indicated in the invoices for business to business (B2B) transactions, to help achieve uniformity in the reporting system. A B2B dealer will have to fill invoice-wise details of the outward supply made by him, based on which the system will automatically calculate the tax liability. The input tax credit will be calculated automatically by the system, based on invoices uploaded by his sellers. Taxpayers are to also be given a user-friendly interface with GSTN and offline tools to upload the invoices.
There will be no automatic reversal of input tax credit from a buyer on non-payment of tax by the seller. If the seller defaults in payment of tax, recovery will be made from the seller. Reversal of credit from the buyer will be an option only to address exceptional situations like a missing dealer, closure of business by a supplier or the supplier not having adequate assets, etc. Recovery of tax or reversal of input tax credit will be through a due process of issuing notices and orders. The process would be online and automated to reduce human interface. Similar safeguards would be built-in to control misuse of the input tax credit facility. Analytical tools would be used to identify such transactions at the earliest and prevent loss of revenue.
The trade has welcomed these moves and, hopefully, rollout of the new system will be smooth.
The government's decision to take up the entire ownership of GSTN has also been welcomed, especially by those opposed to private ownership of GSTN from the outset. The trade is opposed to cess on selective bases that will break the input tax credit chain. Their apprehension is also that once the government
accedes to pressure from the sugar lobby, more sectors will come up with own demands. On incentivising of digital transactions, the views are divided. Exporters continue to suffer because on import under advance authorisation and EPCG (export promotion capital goods) authorisation, unreasonable restrictions have been imposed. On deemed export, they are required to pay the tax and then claim refund. Also, there are awkward restrictions on goods export on payment of tax under refund claim. The government
should address these issues quickly.