‘We Should Have Had Manual Returns For Two Years’
Waman Parkhi, Partner-Indirect tax, KMPG, on the fallouts of a hurried GST implementation
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The concerns are on two counts. One is related to the GST portal and GST compliances done using the portal (such as someone unable to file the transitionary credit claim through form Tran1 due to problems in the GST portal); and two is, various issues related to the new law (issues such as whether a hotel should charge IGST to an SEZ customer when it charges central GST + state GST to other customers, or whether value of dye moulds should be amortised by auto component manufacturers).
The reason the GST portal is not working well is because sufficient time was not given to GSTN to develop the software. If rules were released in June 2017, how can you expect a nationwide software to be ready and running by 1 July? Plus, we were constantly changing the law and procedures which further complicated the software-making process. For instance, even adding a column to a return format on the GST portal needs time. Software is not a table in word or excel where you can simply add or delete a column. Any change would take a long time to trace all areas of the software it will impact. That is why it takes time.
GSTN is taking steps to remove bugs, make certain processes (such as changing the authorised signatory of a company, in case of replacement, simple) easier, and provide solutions to common problems (SEZ status not reflecting for an SEZ company).
We should have had manual returns for two years and let the GST system and law stabilise, give people time to understand how GST works and how it is different than excise and VAT of earlier era, and only then should have introduced IT-based compliances.
At the moment, we do not know if the GST collection is really encouraging unless data for the whole year is available. Further, refunds will reduce the actual revenue government earned — and refunds have started coming now, so that impact also has to be considered.
If at all there is an increase in revenue, it could be because the rates have slightly gone up. But this too is not easy to say as the mean rate under the old regime was very difficult to compute due to variation in state VAT rates and lack of data.
Another reason could be due to fear of matching credits as envisaged in the GST initially — but it is yet to start. That has a potential of removing many possibilities of non-payment of tax or of tax evasion.
Until data is available, it would be very difficult to say if revenues have gone up.
—(As told to Mahua Venkatesh)