While most businesses are happy with the deferral of dates for filing GSTR 2 and GSTR 3 returns, one section that is not very happy with the continuous deferral is the GST Suvidha Providers (GSPs).
The revenue of GSPs, which act as facilitators for uploading invoices and filing returns, come from filings made by businesses. They are now looking at a grim future as with every extension of last date, businesses have been deferring these compliances throwing the whole business model of GSPs out of gear.
The first GST returns were supposed to be filed from September, those dates were then got extended to October, then December. After the recent GST Council meeting, GSTR2 and GSTR3 filings are now put on hold till March 2018.
Nishank Goyal, CEO, Masters India, a GSP, says that many GSPs are now facing working capital problems because due to deferrals of return filing dates, they are not getting the revenue they expected from September itself.
GSPs are already facing tough competition from the offline tool launched by the GST Network (GSTN), the company that created and maintains the IT backbone of the new tax system. According to GSTN CEO Prakash Kumar, so far only 16 per cent of the invoices uploaded have come through GSPs, 10.5 per cent have be uploaded directly through the GSTN portal while 73.5 per cent of rest have been uploaded using the offline tool of GSTN.
Praksh Kumar says we have no option but to offer the offline tools as taxpayers demand them. "Tax-payers, especially the small businesses, which are prone to making errors while filing retuns, prefer the offline tool," says Kumar.
GSTR 1 is return form for all the sales made by a business, GSTR 2 is for purchases and GSTR 3 is composite return form for all the sales and purchases. So far only GSTR 1 have been filed.
Nishank Goyal of Masters India says, "The problem for us is that we have not been able to complete one full circle -- filing of GSTR1, 2 and 3. And now with indefinite extension of filing dates for GSTR 2 and GSTR 3, we have a real problem of revenue at hand. So far, we have seen only outflows and inflows are insignificant."
Most GSPs charge on per invoice or per return basis. As GSPs offer basic services, they cannot charge 'premium' fees. Neither has the government fixed any minimum fee for any of the services they offer. To reverse that, some of them are working a hybrid model and offering value-added services to earn 'premium' fees. The GSPs are banking on scale, but due to continuous deferral of deadlines, they have not been able to attain the kind of scale they had expected.
According to GSTN CEO so far 35 crore invoices have been uploaded. Initially, there were expectations of 300 crore invoices being generated every month under the GST.
There are 34 GSPs and 40 more are waiting for last approvals from the GSTN.