Reports on business processes bring clarity, also raise concerns

The government has put in the public domain the reports on three key business processes - registration, tax payments and refunds - under the goods and services tax (GST) regime last week. Business Standard reached out to tax experts to understand how life will change for businesses under the new tax regime.

Currently, a service provider having operations in multiple states can opt for a centralised indirect tax registration. But, under GST, the service provider would have to obtain the GST registration from all the states wherever it has its presence. "This will lead to tremendous increase in volume of tax compliances for such organisations," says Pritam Mahure, a Pune-based GST expert and trainer.

Although the industry is looking for simplification in the ease of doing business, for service companies compliance requirement would go up manifold under the new regime. "This would also require changes in income tax and books of accounts to factor in tax incidence in each state," says Nitish Sharma, executive director, Nangia & Co.

Tax experts point out that the focus of the new regime is on compliance to capture the revenue, bringing more output into the formal system. Any delay in applying for GST registration could cost a taxpayer dearly, as GST credits on procurements prior to registration will not be available.

Currently, following judicial precedence, one is allowed input tax credits pertaining to the period prior to date of obtaining registration. Under the new tax regime, registration is expected to be granted in just three working days, provided the central or state authorities neither reject the application, nor raise a query.

Exporters currently have the option to avail of duty-free inputs. In the GST regime, this option may not be available. "This may lead to serious blockage of funds for exporters unless refunds are processed in a time-bound manner," said Mahure. Taxpayers are expected to earn interest in case of delay in processing of refunds.

The GST drafting committee is yet to come out with appropriate provisions for place of supply rules that establish where a service or good has been consumed. "Absence of place of supply rules creates a lot of ambiguity for business," says Suresh Rohira, partner-indirect tax, BDO India. Tax experts say businesses are likely to get a clearer picture of changes in their business processes as government comes out with a detailed framework, along with rules and regulations governing the new tax regime.

SHAPE OF THINGS TO COME

Registration

• There will be state-specific single registration for Central GST (CGST), Integrated GST (IGST) and State GST (SGST). Multiple registrations in a state for business verticals would also be permitted
  

 

Registration number would be a PAN-based 15-digit alpha-numeric registration number
 

Registration would be granted through common GST portal
 

Registration deemed to be approved if not rejected

Payments

• Taxpayer will be required to make payment of CGST, SGST, IGST and additional tax through internet banking
   
• Over-the-counter payment could be permissible only for payments up to Rs 10,000 per challan
   
• For making e-payment, GST taxpayer will be required to access Goods and Services Tax Network (GSTN) for generation of the challan where basic details of the tax payer will be auto populated

Refunds

• Under certain situations, such as exports, excess payment by mistake, refund of pre-deposit, and refund to international tourists, the taxpayer can claim refund of GST paid
  

 

For export of goods, an exporter should procure goods on payment of appropriate GST, and then claim refund from respective governments
 

Duty-free inputs for exported goods may not be available