Traders body CAIT today proposed that the government should waive penalties on compliance errors during the first three years of rollout of the goods and services tax (GST) regime.
Observing that it would be difficult for anyone to evade taxes under the new framework, CAIT said even the instances of under-invoicing will gradually wane as the tax department will have PAN-based registration and sale-purchase data of traders.
"GST will be a complex structure of taxes and we have asked the tax department to exempt traders from penalties in the transition period of first three years," CAIT Secretary General Praveen Khandelwal said.
To educate traders about the new indirect tax set-up, the Confederation of All India Traders (CAIT) has entered into an MoU with Tally Solutions to train them on GST compliance and adoption.
The government plans to roll out GST from April 1 next year. The GST will subsume excise, service tax and other local levies.
Khandelwal said the next meeting of the GST Council, to be chaired by Finance Minister Arun Jaitley, later this month will decide on tax rates, products and compliance and after that, CAIT will prepare the working module for traders.
A standard GST rate of 18 per cent would be "justified", and at that rate, the investment cost of traders will be less, he told reporters here.
Asked about the fate of traders who do not give bills at present, Khandelwal said the GST design does not have this option.
"We have to give sales details to the tax department and hence, there will be no scope of under-invoicing as over a period of time, all data will go to the tax department," he said.
CAIT National President B C Bhartia said that since GST registration is PAN based, so the government will get to know how many traders have not registered from its own database.
"The purchase ledger of traders is with the government. So by under-reporting of sales, if stocks start piling up, the tax department will ask why are you purchasing? With so much data, it will become difficult to evade taxes," Bhartia reasoned.
He said last-mile disposal by an importer will come under the tax lens through Integrated GST and hence, under-billing will become difficult.