GST glitches irks traders
The much talked about GST implementation finally got rolling in July 2017 amid a lot of fanfare and ambiguity.
Lionized as giving one unified tax rate across the country, the goods and service tax (GST) is one of the major reforms that the NDA government has been able to implement in the country.
GST is often talked about in the same breath as ease of doing business.
Replacing 17 state and central taxes, GST has drastically brought down the paperwork and registration process hence positively impacting the ease of doing business metric.
‘Earlier one had to run around 17 departments to get themselves registered in 17 different places. Now with the implementation of GST you just need to register yourself in one place that too online’ said a senior Central government GST officer.
Albeit on the outset everyone adheres to the gist of GST, many have been miffed by its procedural challenges wherein some believe the government hastened its implementation.
The micro and small industries often considered as the backbone in an economy like India have been the most critical on the procedural bottlenecks that the new tax regime has presented itself with.
‘Paperwork has increased. No clarity whatsoever. Instead of concentrating on my core business I spend hours together understanding/navigating this new tax regime’. These are some of the sentiments that get echoed time and again from small businesses.
Most of the organizational activities in the micro and small businesses are done by the owner himself which also includes much of the accounting work. With the advent of GST micro and small businesses have seen their book keeping costs increase significantly.
‘Sales have nose-dived’ says Mr Murtaza of Al Hussaini Machinery and Co.
‘The government had said there will be no cost increase however products that were earlier under the excise ambit used to be taxed at 7% now under GST they are taxed at 18%’ he says.
There have been plethora instances wherein traders have had difficulties in filing their respective GST. ‘Under VAT filing was very easy it just took us 1 day now it takes upto 7 days says Mr Manish Somani of Arvind and Co.
Echoing similar concerns Mr Jafar Qutbi of Hydraulic Home lifts finds the filing process very cumbersome. ‘The website I feel isn’t adequately prepared to handle the traffic as it keeps hanging/breaking down regularly’ he says.
Another major impediment in the GST has been the input tax credit (ITC).
‘GST hasn’t really impacted the sales in our business much as we deal with the organized sector however the methodology of collecting the ITC I believe is a bit unfair’ says Mr Abbas Sadique of National Oil & Petroleum Products.
He says under the new tax regime the onus lies on the retailer to make sure that his principal/seller uploads his invoice so that he in turn can get the input tax credit (ITC) for it. This monitoring aspect Mr Abbas opines should be the responsibility of the government and not the retailer/buyer.
Clarifying, the central government officer asserts that this mechanism was structured keeping the best interest of the business community in mind.
‘This is a self- check mechanism. It’s easier for small business to keep a track of their respective vendors than it is for the government to do it for them’ says the government officer.
He further informs that for purchases wherein invoices have not been uploaded/tax liability has not been accepted by the seller there is a provision for the buyer to upload the details of the purchases and the tax paid there on. ‘The seller is then given 2 days to rectify that mistake’.
Identifiying the HSN code as being tedious Mr Somani says ‘I don’t understand what the use of the HSN code is. It has been a failure in other countries so why implement in India’. He strongly advocates its removal (A dealer has to mention the HSN code at the time of filing an invoice).
There are millions of products in the country how is it possible to group products without giving them a unique code retorts the government officer. It was for this reason the Central excise department adopted the HSN code of the customs act in 1986 says the government officer.
‘It is a well-established classification of various products’ he states. Further informing that small dealers below the Rs 2 crores threshold aren’t even required to mention the HSN code in their invoices.
While all seem to be supportive of the overarching objective of GST they however hope that some of the teething problems and ambiguities that persist in the system are efficiently and effectively resolved at the earliest so that they can put their focus back on their businesses.