The post-GST era has so far witnessed exporter numerous strikes, errors and mismatches in returns filed as well as the World Bank calling GST a very complex Taxation system. But, several months ago, on July 1st, 2017, India as a nation had taken a giant leap towards a new order in its taxation History. GST was touted as India’s second tryst with destiny.
However, more than 4 years down the line and after multiple policy updates, it seems that not everything has unfolded as planned. This was, however, a possibility and the Government was prepared to incur short-term losses in exchange for large future gains. GST in India not only boasts one of the highest tax rates but also consists of the largest number of tax slabs. Add to this the growing compliance burdens, technical as well as compliance issues.
Among Asian countries, India has the highest standard GST rate. On the planet, it is second only to Chile. The non-zero rated products ( 0, 0.1, 0.25, 1, 1.5, 3, 5, 7.5, 12, 18 and 28 per cent) combined with the remaining zero-rated products and the 3 percent GST-rated Gold are a sharp deviation from the one Nation one GST Tax dream. Petroleum products, power, and real estate are still outside the GST ambit.
In this blog, we try to throw light on the issues that currently plague the newly levied GST taxation system in India as well as the taxpayer’s grievances.
Goods and services tax is currently going under tremendous pressure to go through some of the burnings and solution-seeking problems of the year-old implemented indirect tax regime. The finance ministry, as well as the GST council, needs to take care of the GST return filing issues and forms-related consequences that have to be faced by the taxpayers alike.
Let us discuss and find those priority topics of GST on which the GST council and the finance ministry must work immediately:
It might be wrong to the taxpayers as they cannot claim the ITC before matching the invoice, for the date being shortened to October 20th. Also, the credit of ITC claimed or unclaimed is to be claimed or reversed according to the filing dates, so the dates must be extended.
The credit claimed on the purchases in which the payment has not been given to the suppliers within the 180 days must be reversed. And to keep a note of these things may indulge an extra burden on the organization.
As the annual GSTR 2A can’t be downloaded and has to be viewed monthly, this has created difficulties to match the returns with the books of accounts with 2A returns. Comply of Rule 36(4) on a mandatory basis also creates now a problem.
The tax liability has to be paid on the commission according to the taxable goods but when the goods are rated NIL and the commission is not taxable therefore making it an issue for builders and landlord taxation liability.
Under this return type, there is no modification or amendment facility available and in case the changes are to be made then there is a lengthy one month period time for the amendment making it an interest liability issue.
There will be issues in the Trans 1 notice in Form 603 as it is now sent by the department to everyone making it troublesome for the real taxpayers. As the notice requires all the previous records to be available making it a tiresome issue for the taxpayer to provide the details again.
Below is the list of other important issues that have been continuously facing by small traders and businesses such as e waybill, technical glitches and much more.
GST implies additional operational costs for Small businesses. In a developing country like ours, not all SMEs will be able to afford the cost of computers and accountants required to implement GST (make bills and file tax returns). 28% GST rate on some products like plywood, automobile parts, and electronic items forces potential buyers to opt for unregistered dealers.
It is too difficult to assign MRP to handmade products like local shoes, Banarasi Sarees, etc. Most small artisans are illiterate and therefore unable to write MRP on their products and/or do any paperwork. Dealers are confused about how to rate such products.
Small businesses that have a small turnover and need not pay GST face trust issues. Buyers demand bills from even those sellers who are exempted from GST. Without proof of a certificate of GST exemption, small shop owners find themselves stranded and immobile.
E-commerce giants like Flipkart, Amazon also have not escaped the aftereffects of GST rollout. TCS has to be collected by the e-commerce companies from the sellers at the time of payment.
The capital blockage will hamper day to day operational costs due to TCS provisions. The GST council has fixed the 1 per cent TCS over the deduction made while payment to the sellers.
The E-way bill had the potential to liberate interstate trade from all sorts of obstructions. The excitement could be felt among the slightly nervous business community. But on the day when the Finance Budget 2018 was being introduced to the Lower House, the lethargic GST network turned to be a major spoilsport and February 1 turned out to be a watershed moment for the upbeat government. The inability of the network to handle large volume e-way bill requests was at the forefront of public jokes and disappointment. Immediately e-way bill was rolled back. In the aftermath of the failure, goods carrying vehicles were left stranded and highways enjoyed pin drop silence for a few hours. The crumbling GST network has been in the spotlight from the very beginning and it continues to garner unwanted criticism and public grievances.
The GST Council need to find permanent scalable solutions rather than interim ones like the GSTR-3B. The sloppy GSTN Network raises serious concerns over the Government’s claim of a digital powered economy. GSTN is managed by Infosys, a premier IT services company. The e-way bill network was managed by the venerated NIC.
The GST E-way bill is a major concern for most of the companies which are regularly into the business of transporting goods and sending material over the locations, the transport company is also trying to figure out how it would deal with the GST E-way bill provisions. As soon the bill expires the transport company or the trucker himself has to generate the GST E-way bill on his own. The GST Council must have taken all these concerns into strict consideration and ensured easy and simple e-way bill generation procedure which has been effective from April 1, 2018
The consistent policy rollbacks and amendments, powered by the glitchy GSTN Network, have enabled massive tax evasion. The benevolent composition scheme, as well as windows for filing quarterly returns, raise concerns about the intention and execution prowess of the government at the centre. The increased pool of registered taxpayers has had little but no impact on Revenue generation. Only 70% of taxpayers file returns regularly. A major headache is, however, the mismatch between initial and final returns filed by taxpayers. There is an estimated mismatch of Rs 34,000 crore tax liabilities reported in GSTR-1 and GSTR-3B. The present GST structure has no mechanism for checking discrepancies found between GST Returns for July-Dec and Final Returns. About 84 % of the taxpayers were unable to correctly report revenue statements. The discrepancies and e-way bill failure demand that the GST Council now needs to take rigorous measures to tackle the menace of tax evasion through under-invoicing.
The GST revenue shortfall promises large dents in the Centre and states’ fiscal applecart. The Center and State budgets will be pegged down by the gap in Tax revenue. The common man will find himself on the receiving end if such a gap in revenue continues. To bring states on the same wavelength and approve GST, the government had offered state compensations to the tune of Rs 60,000 crore for July to March in FY18. In order to stay true to its pre-GST promises, it is estimated the Central Government will have to make payment to the tune of Rs 90,000 crore further in FY19.
Understandably, the Budget 2018 unleashed record taxation of over Rs 90,000 crore in the form of capital gains tax, increase in customs duty, cess and surcharge. The fall in revenue has further made states apprehensive about bringing petroleum products and real estate under the GST ambit.
Indian economy is majorly driven by small business units i.e SMEs. It will be unfair to expect small-scale business firms to make the transition to an online IT platform and expect no errors in return filing. It is an uphill task for the majority of our working population which has little hands-on experience with IT solutions. The cost of SRP deployment is a major concern for micro-small-medium scale enterprises.
The Confusion
For a frictionless and less burdened GST, the government is looking to shore up revenues to the tune of Rs 1 lakh crore per month. It would be interesting to see if the Government still has the courage to take stern measures against tax evaders and other business firms involved in anti-profiteering activities. The GST was projected as India’s second tryst with destiny. However, the financial budget of 2018 has thrown a wide plethora of taxes at the Indians to gobble up. Increased taxation is the only way of generating operational revenues for a complex system like GST in the nonlinear Indian Demographics.
In conclusion, the present GST appears to deliver little promises. The GST rollout it seems was done with very little homework both at operational and technical ends. For the time being, the GST Council needs to pay heed to grow public as well as taxpayer grievances. It must take note of the fact that policy must be designed to reduce the compliance burden on the taxpayers. Compliance strategies must include compulsory education and assistance programs and risk-based audit programs. It must also run a communications campaign that enlightens the various effects as well as benefits of GST amidst businesses, consumers and important intermediaries.
The roll-out of the Goods and Services Tax Act (GST) in India is followed by the beginning of online GST Registration and e-filing of GST Return filing. Among regular amendments & digitalization of tax-related tasks, Chartered Accountants are constantly coming across various challenges that vary from using the online GST mechanism to the alignment of their books & records to meet the new GST requirements. This led to the investment of increased efforts and time by CA due to incorporation of details such as customer’s address & GST Number, HSN Code (Harmonized System of Nomenclature) for products & SAC Code (Services Accounting Code) for services in the invoices and issuance of documents such as a Debit note, Credit note, Receipt Vouchers, Bill of Supply & E-Way Bill under the various circumstance.
The administrative work of CA has also increased due to mandatorily filing of several returns, based on the constitution & the sales turnover of the business. Besides a CA has to manually furnish details & enter all invoices & bills into different tools or company’s software or spreadsheet to adhere to the GST mechanism, followed by the creation of GST reports, cross-verification of company’s purchases, sales & ITC details, correction of mismatches and finally upload of information to Government’s GST portal. Under GST, a CA has to ensure the reconciliation of data between the seller and his supplier to claim full ITC and avert unnecessary payment of taxes. Reconciliation is a tiresome & a time-consuming job that has to be executed on a monthly or quarterly basis, depending on the company’s turnover.
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Atul is a professional content writer with specialisation in business and marketing content. I have been writing tax articles and news for about two years now and have good experience in GST and income tax domains. View more posts
41 thoughts on "Major GST Issues/Problems Seen Across India Till Now"
P.Srinivas says:Dear Sir, My customer Bill date is 29-8-2019 Bill value is Rs. 2912153, Gst Amount Rs. 5,24,188/-, August,2019 month GSTR-1 & GSTR-B is nil filed, Sep-2019 month GSTR -1 & GSTR-3B Nil Filed.
For the month of Oct, 2019 the above bills GSTR-1 is filed bill date is 29-8-2019 mentioned in GSTR-1. Tax Rs. 524188/- Not filed GSTR-3B, In the month of March, 2020 GSTR-3B filed tax amount Rs. 524188/- is it correct or not please explain sir Regards
P.Srinivas
Regard
P. Srinivas
It is not correct, you have to enter particular liability in a particular period, otherwise, it will create interest liability on your end
Harinadh says: Sir, can you explain in detail about complexities of GST with some Cases. Priyabrata Mukherjee says:Dear Sir We, the batchmate of Jalpaiguri Govt. Engineering College, North Bengal of 1983 batch raising some amount through a savings account which is operated jointly by two of our batchmate for the purpose of purchasing 5 Nos. of oxygen concentrator and after purchasing we want to donate the same to Ramakrishna Mission Hospital for the helping of treatment of people. Ramakrishna Mission is an organisation involved in many social activities.
Now, we want to know that as we are donating the oxygen concentrator to an organisation that is not making any profit of that, then for purchasing we have to pay GST or the GST will be exempted. If there is any scope of GST exemption then what procedure we have to follow (the billing will be in whose name and from which account we should make the payment etc.). Please guide us and thank you in advance. Yours faithfully
P. Mukherjee
Doubt about GST for Affiliate Marketing Professionals. I am working as an affiliate marketer (for Amazon and Flipkart) and earned around Rs. 16 lakhs till November 2020 and hope will cross Rs. 20 lakhs this financial year. I think I have to take my GST registration once my earning crosses Rs.20 lakhs in this financial year. I have the following doubts? 1) If I take GST registration now, am I responsible to pay the whole GST for this financial year (ie. 18% of 20 Lakhs)? 2) If I take GST registration, am I responsible to file GST returns monthly even my earnings will be below Rs.20 lakhs in the next financial years? 3) Since my earning are based on the advertisement of Facebook Ads and Google Ads, is it a wise decision to limit my earnings below Rs.20 lakhs this year and take GST registration in the next Finacial Year?
i. Liability starts after registration ii. You can opt for Quarterly return filing or opt for monthly return filing iii. Yes that’s also a good option
PRANSHU PASRIJA says:Could Not understand this question The tax liability has to be paid on the commission according to the taxable goods but when the goods are rated NIL and the commission is not taxable therefore making it an issue for builders and landlord taxation liability.
Not able to understand what you want to ask Harendra Sharma says:Hi Team,
pls help to understand how can Refurbished Electronics goods like mobile handsets can be accounted under Margin Scheme of GST.
Currently Tally n Bizy are popular amongst resellers..which don’t have any provision to account for Margin Scheme. Thanks!
Hello Everyone just want to ask one question we have 3 layers of business we give big order to the manufacturer and sale the same product under over brand name not when we purchase good manufacturer charge GST and we pay and take credit now when we sale product to over franchise we charge GST on bill amount
we deal in the pharma sector so how the GST calculated on MRP based product as at last at least GST not paid on the profit margin of the retail seller if anyone has any clarification if I have not the knowledge of any computation method please let me know thanks
If an item is despatched by a GST registered dealer to a GST registered end-user and some parts are short due to non-availability during despatch of the item but are included in the cost of the item and GST collected on the item and parts despatched later what procedure needs to be followed. And if item amount more than 50k. Also clear again GST dealer pay GST on pending part when despatched or not?
amol wankhede says:We have one contractor, he is working in both companies, by mistake he submitted both companies GST amount on one company in Sep 2018, we suggested him do amendment for it and make reverse our GST amount in our portal, he said he done amendment but its didn’t see in our portal till, extra payment we can see another company,
can he do amendment right now ? or can he claim to refund which extra amount filled by him
now we hold his 3+ amount as a penalty base(200000*3=600000). please give suggestions.
