Major decisions like – “introducing a monthly compliance regime, nationalising GSTN, and Sugar Cess” were taken in GST council’s recent meet.
These are likely to be perceived negatively by industries as it further complicates compliances and enhances tax burden.
What expectations were belied by the GST council?
Collections from the GST reached over Rs. 1 lakh crore for April 2018.
Hence, the industries hoped that the GST Council would make filings simpler as compliance is increasing.
Indeed, the Council recently decided to introduce a new compliance system that mandates the filing for a monthly GST return (with minor exemptions).
This new norm is to be introduced in a phased manner — with the first of three transition stages to begin six months from now.
How is the progress on simplifying returns filing?
Discussions among stakeholders over simplifying GST returns have been under way for months, but a concrete solution hasn’t emerged yet.
For instance, in the second stage of the transition to simpler returns, buyers will get provisional input credit even if the seller doesn’t upload the invoices.
This could lead to disputes if “a seller defaults on GST dues and remains evasive” – as authorities might withdraw the credit availed by the buyer.
Transition time to the GST regime is also proving long, and businesses that are yet to recover from the initial disruptions are facing further uncertainties.
Also, firms will again have to cope with significant changes in accounting software in the middle of the financial year – which is another slog.
What are the other major decisions taken?
Cess - A cess at the rate of Rs. 3 a kg is proposed to alleviate deep distresses among sugarcane farmers (over and above the 5% GST).
Several States have opposed this as it would burden consumers while favouring larger sugarcane-growing States like U.P. and Maharashtra.
In addition, a special sugar cess will signal a looming breakdown of the basic tenet of GST - the abolition of such cesses and surcharges.
Notably, barring the “GST Compensation Cess” to help states to bridge their revenue shortfall for the next 5 years, all cesses have been abolished currently.
GSTN - A decision has been made to make the GSTN a 100% government-owned firm, instead of the present structure with 51% private ownership.
While “data security concerns” is said to be the reason for such a move, the implications of this on the “network’s functional efficiency” wasn’t discussed.
