Industry facing GST rollout blues

Even as the Goods and Services Tax (GST) has been rolled out to bring in one of India’s biggest tax reforms, traders, retailers and overall business community is finding it difficult to adjust.

It seems that the preparation, both from the business community and the tax enforcement agencies is still not complete and there is much ambiguity in understanding GST. There are some persistent issues which the government will have to look into.

The issues involve how to get familiar with various forms, returns, dates etc which the dealer and retailers have to file and particularly the return where one has to carry forward their input credit from the commercial taxes and excise regime to the GST regime. This is where hand holding by the government is required so that the appropriate amount of input credit is carried forward and there is no loss to the dealers and retailers on account of non-compliance of any forms or returns. There is also a feeling that government should take a softer view for non-compliance as it is a new regime and new method of filing returns.

There are too many returns which are required to be filed. In total about 37 returns annually. Three returns per month have to be filed and the government has conveyed that all these three returns are different parts of the same return. It is difficult to be compliant if the person is not computer literate or has no staff support. A single return per month would have been more feasible for business person and the compliance would have become much easier. Also, a small error in filing the return can lead to mismatch which is cumbersome for computer illiterates. Needless to mention, that a business person may have to hire experts to keep the data and record which will be an addition cost on him.

The other issue being discussed in the trading community is whether they are submitting too much data to the government. This is because of the trust deficit between the government and the industry. In some cases it could be justified. What is important in this is case is that as early as possible such extensive data should be curtailed and the business person should be asked about the required data only. This will particularly help the smaller assesses.

Also being discussed in the industry is that twitter and facebook are being used by the government to disseminate information. While the replies are coming faster, all replies are only for guidance which have no legal sanctity. 

“The key issue which is now creating problem is the matching of the credit. The fear among the business community is that in earlier regime there was only one return and matching of the credit was a problem then. Now with three monthly returns it is likely to increase further. There are several rates in this new regime. For example, a hotel goes into multiple rates which will have several different slabs in the restaurant and rooms,” said Mr Sandip Bhandare, noted Chartered Accountant in Goa.

One other issue which the traders are facing now is the reverse service tax from the unregistered dealers. This is area where the registered dealers are finding it difficult and they do not get the benefit of input credit. 

“The biggest test will come from the lack of skills among taxpayers in using digital tax reconciliation,” said Neetant Shirodkar a Chartered Accountant. To claim all advantages of input credit on sales one needs to go through the tax reconciliation system as it requires tallying and the worry is that the traders are not very tech savvy as no Chartered Accountant will have the time to tally thousands of bills form each individual.

Prasad Tamba, president of the Chemists and Druggists Association of Goa is of the view that still people in their business sector have not received proper registration documents as there is mismatch between PAN card and Aadhaar card.

“Our basic problem is the input tax credit. I doubt that there will be any reimbursement for the stocks for pharmacy that we are holding till June 30. Secondly there is every likelihood that there will be shortage of some of the medicines because many of the companies have held their stocks at the CNF level on account of the excise duties and will release only after June 30. There may be delay of 15 days for the availability of some of the medicines,” said Mr Tamba.

He added that, “right now we are holding stock is 5 per cent and GST applied on medicine is 12 per cent. Hence we are losing 7 per cent as we have to pay GST. This is not going to change and all pharmacists will have to bear this additional burden.