Even as the focus of the next GST Council meeting on December 18 is on measures to augment the revenue collection, the government has started discussion on simplifying the GST filing process to improve the ease of doing business and compliance.
In the first week of December, Finance Minister Nirmala Sitharaman met chartered accountants, traders and other stakeholders to take stock of their views on how to simplify GST compliances.
Business Today spoke to various stakeholders to understand their suggestions on what changes they seek from the government to simplify not just the return filing process but also the overall compliance requirement.
Less number of tax slabs
This is one of the most important demands of the industry and tax experts. Currently, there are five tax slabs (0 per cent, 5 per cent, 12 per cent, 18 per cent, 28 per cent) and the taxpayers want it to get reduced to two or three tax slabs. The government has constituted a panel of tax officials who seem to have suggested to increase the 5 per cent slab to 8-10 per cent and the 12 per cent slab to 15-18 per cent. A move like this would not only lead to better revenue collection but also fewer tax slabs.
"We need to condense the tax-tier structure. As a consequence of smaller band of GST rates, the classification related disputes may come down," says Anita Rastogi, partner, indirect taxes, PwC India.
HSN codes should be optional
Mentioning HSN codes, a six-digit numeric code used globally for classification of goods, is mandatory under GST. Over 5,000 HSN codes have been allotted to different goods. Experts want HSN codes to be made optional at least for smaller taxpayers.
"There is much confusion and overlapping in HSN codes, and sometimes it becomes a pain in the neck to get the right HSN for your product. If HSN codes are made optional instead of compulsory, it will become easier for everyone," says Rajesh Gupta, Co-founder & Director, BUSY (Accounting Software).
Discontinuance of GST audit for dealers with turnover up to Rs 10 crore
Getting a GST audit done involves additional compliance and related cost, which is a big burden on smaller taxpayers. Experts want the threshold for companies to undertake a GST audit to be increased from Rs 2 crore to Rs 10 crore.
Annual change in tax rates
Frequent and unexpected changes in tax rates become a compliance nightmare for both the taxpayers and agencies involved in overseeing the compliance.
Tax experts say conventionally there was an annual change in rates of legacy taxes such as central excise and service tax, which had helped taxpayers plan the purchase of inventory, output and accordingly the whole of supply chain. They want similar certainty in tax rates.
"With the frequent changes in GST rates, the manufacturers are finding it difficult to contain the implications in the supply-chain. We must remember that any change in rate requires an immediate action at every stage of the sales and distribution. Thus, to eliminate any arbitrage, the frequency of change in tax rates should be reduced to annually," says Anita Rastogi of PwC.
Return filing frequency to be made quarterly for all taxpayers
Rajesh Gupta of Accounting Software firm BUSY thinks that return filing can be made quarterly for everyone even as taxes can be filed monthly. His rationale: "Right now, some of the businesses file returns on monthly basis and some file it each quarter. In case of monthly returns, reconciliation becomes difficult, as businesses need to wait until suppliers file their quarterly returns. If return filing is made quarterly for everyone, it will save precious time for business owners and reconciliation will also become smoother."
Harpreet Singh, Partner, KPMG goes one step ahead and says instead of multiple returns, annual compliances and e-waybills that have one data collection point (such as e-invoicing) would significantly reduce compliance burden. He further adds that with e-invoicing to be implemented next year, abolition of e-waybills, auto-population of GST returns, and reduction in overall compliances would be in the wish-list of all dealers.
Extend the automatic refunds route
Experts believe that the government should extend the present automatic-refund route to other classes of taxpayers also, where similar to income tax, the GST refunds should be granted merely on the basis of the declaration made by the taxpayer and only cases involving suspicion should be investigated in detail.
Instead of invoice level reconciliation, party-wise summary should suffice: At present, for claiming the input tax credit, a buyer needs to reconcile all invoices of our suppliers. In case of mismatch between our data and supplier data, ITC is disallowed. Even if the tax value is same in both the data, there could be a mismatch in the invoice number and date. "Invoice level matching is a cumbersome and tedious task and consumes a lot of time and peace of mind. If only party-wise tax summary is to be reconciled, it will make reconciliation a bit easy," says Rajesh Gupta of BUSY.
Centralised GST registration facility for service sector: Service Industry has been majorly impacted by the introduction of GST due to enormous increase in monthly compliances to be done by the service companies. In the earlier tax regime, service companies were allowed to obtain single centralised registration even if companies operated from multiple locations. They were required to file only two returns during a financial year. Under the GST regime, these companies are required to obtain separate registration in each state of operation and file 26 GST returns (two monthly returns and two annual returns) for each state of operation in a financial year.
This could be the most revolutionary idea. Single-point GST means that the entire GST is recovered from the final manufacturer at the maximum retail price (MRP). The idea is to make free the wholesale and retail traders and job workers from the processes of GST laws. This has been propounded by The Federation of All India Vyapar Mandal, a New Delhi-based traders' association.
According to the national general secretary of the Federation V K Bansal, in a product 75-80 per cent value is added by the manufacturer, who forms 10-15 per cent of total taxpayers, and rest by traders. "If the GST is imposed only on the manufacturer and that too at the retail price (MRP), the government's target will be met at the manufacturer level. When the government collects the GST on MRP from the manufacturer himself, the shopkeepers who sell the goods will be exempt from the tax liability and compliance," says Bansal.