100 days of GST: Five gaps that need to be plugged

A 100 days after the roll out of GST, here are some measures that could help smoothen the experience for taxpayers and tax administrators

Exemption limit on procurement from unregistered dealers

Under the GST regime, requirement to pay tax under reverse charge by registered recipient of goods or services in respect of procurement of goods from an unregistered vendor has been proposed to be deferred till March 31, 2017. 

Though the deferment is a welcome move, the provision should be abolished completely as the same leads to unnecessary increase in compliances and is anyways available as tax credit thereby being revenue-neutral.

Procedural gaps to be covered

India’s largest tax reform is yet to be fully put in place, thanks to patchy technical implementation. Systems underpinning the tax have been plagued with many problems that result in deadlines in the filing of GST returns now being pushed to October and beyond.

The GST Network website for filing returns is facing “issues”, throwing into disarray the return filing processes for some businesses. The common complaint among taxpayers is a very complicated process of filing returns. The functioning of the portal needs to be improved  so as to ensure that tax compliance is not tedious for the assessees.

Advance Ruling Authority needs to be established immediately

The Aadvance Ruling Authority (ARA) can be approached to seek clarity on applicability of GST laws and rules. It should be established immediately to deal with legal issues faced by the taxpayers. This would ensure that tax positions are clarified on a timely basis and litigations are minimised.

Zero rate of tax for education and health services 

Education and health services have been exempted from GST. The objective is to make education and health care economical. However, since the procurements by both these sectors are largely taxable, the end consumer is not able to get the benefits under GST. 

It is recommended that that the government makes supplies to these sectors as zero-rated. This will enable that refund of input taxes will be available to such sectors and  the final benefit of reduced prices will be passed on to end consumers. 

Abolishing tax on advance for goods

The GST Council has proposed abolishment of payment of tax on advances received by dealers with a turnover up to Rs 1.5 crore. This step has come as a big relief to the taxpayers. The said benefit should also be extended to other assesses irrespective of their turnover. This would reduce the compliance burden on industry. Moreover  this is unlikely to impact tax collection as tax would be paid on such advances as and when the goods are supplied.

(The author is partner, indirect tax and GST, PwC. Prashant Gupta & Preetam Singh also contributed to the article)