Goods are services tax introduced as ‘One Nation, One Tax’ to eliminate the multiple taxes such as VAT, Service Tax, Sales tax etc. The new tax regime, which has a dual structure, further aims to reduce the complexities of filing the GST returns as were prominent under the multiple taxation system. Thus, the tax slab rates of 5%, 12%,18% and 28% were levied by the government on all goods and services. However, while GST was implemented three years back, the complexities of the new tax regime remain operational. As a result, there has been tax evasion by the businessman.
What are the complexities in the Goods and Services Tax:
- The difficulty in filing the GST returns lies mostly with the small businessmen. While the big businessman can afford to comply with the GST returns status with the help of GST software. The small illiterate businessman can hardly understand the IT software or neither can they hire the accountants who could help them in solving compliances. These businessmen can thus not file for any input -tax credit or opt for the composition scheme as they lack knowledge or means of online technology. Thus, the complexities oF GST compliances further increases the cost for these small businessmen.
- The government has introduced the composition schemes, which is a simplified process of filing the GST returns, whose turnover is less than one crores. However, the problem with the composition scheme is that most of the businessmen do not apply to this scheme except for certain services. Further, most of the businessmen lack the knowledge to opt for GST compliance.
Simplification in GST compliances:
Earlier, the businessman had to file multiple GST returns under (GST-1,2,3/3B). The businessman whose turnover was more than five crores had to file the GST RET-1. While the small business with the aggregate turnover less than 5 crores could file GST RET-2 or GST RET-3 depending on whether they were dealing with the end consumers(B2C) or with (B2B) AND (B2C) both. These taxpayers could file the GST returns every quarter.
To simplify the compliance of filing the GST returns, the GST council proposed a new system for filing the GST returns under one single return. The taxpayer could now comply with the GST returns through GST RET – 1, which has two separate annexures of ‘GST ANX-1 and ANX-2’. The small businessman could file the returns by submitting returns quarterly through ‘GST RET-2 or GST RET-3’. However, this could not reduce any complexity in filing the returns or claiming the input-tax credit.
Old and the New dealers: The existing taxpayer does not need to refresh with the processing of the tax system. On the other hand, in the case of the new taxpayer, an application against GST registration in India has to be made. The GST registration will be duly attested by the PAn, and it will also be checked by the Centre and State. After the following all the perquisites, the final verification will be set and done without any delay.
In case we have a look at the old system, it was quite long and tedious, and single tax had to pay for each transaction at a centre as well as a state level. Now, as per the new system, GST includes both CGST and SGST. This is also the reason GST is called the Goods and Services tax.
GST as a whole parameter is levied on the sellers, manufacturers and the consumers of the goods and services. Making the use of a GST Calculator is very helpful.
Significant problems with GST compliance:
- It is difficult for the businessman to claim for the Input Tax credit due to a gap in the efficiency of processing of GST returns every quarter. It takes a considerable time and complexities to file the GST returns.
- The problem with the adoption of technology is another cause of concern as lack of computer or software complicates the issue of filing the GST returns on time and without any error. It is a considerable drawback for the small businessman who cannot comply with the new system of presenting the multiple invoices, coordinating with the various vendors to claim the input- tax credit and so on.
- Further, issues like inconsistency in key fields like an invoice number can also be a drawback as different taxpayers have different methods of recording the invoices. It can complicate the process of reconciliation of data.
The urgency to simplify the goods and services tax: With the exemption of taxes on specific goods and services, rates multiplicity and the complexities of GST compliances is not at all a good factor for the new tax regime. Apart from the modification in GST slab rates of certain products, there is undoubtedly urgency to simplify the process of filing the GST returns to eliminate the tax evasion by the taxpayers.