Moving ahead on the proposal of returns simplification under the goods and services tax (GST), the Group of Ministers (GoM) formed to monitor and resolve the IT challenges will hold a meeting with all stakeholders on Tuesday. Bihar’s Deputy Chief Minister and the head of the GoM Sushil Modi said they will meet about 40 industry and trade bodies and also consult about 20 tax experts on the proposed returns simplification.
On Monday, another Group of Ministers (GoM) formed to examine reintroduction of Reverse Charge Mechanism (RCM) held its first meeting. The GoM, which is also headed by Modi, did not take any decision about the RCM implementation and will meet again next in May.
RCM, which had earlier been kept on hold till June 30, is expected to be the next anti-evasion measure after the introduction of e-way bill this month. Under reverse charge mechanism, when a registered person buys goods or services from an unregistered person the liability to pay GST will be with the registered person (recipient of such goods or services).
The GoM on RCM was constituted last month to examine aspects related to reintroduction of RCM keeping in mind the need to plug tax evasion and interest of small-scale taxpayers. The Committee is looking at bringing certain categories of taxpayers such as composition scheme dealers or certain categories of goods and services under the RCM. The GoM was slated to submit its report by April 27 but since it will hold its second meeting in May, the report submission deadline will be extended, officials said.
The government had earlier cited deferment of implementation of some of the main features of GST such as, matching of returns, e-way bill and reverse charge mechanism as the reasons for low compliance under the indirect tax regime. After a meeting in December, the GST Council had then approved February 1, 2018 as the date for e-way bill system for inter-state movement of goods across the country but the system crashed on the first day of the rollout. The government then introduced e-way bill for inter-state movement of goods from April 1 and a phased rollout of the system at intra-state level.
The GoM looking at returns simplification had last met in February but could not reach a consensus as as states’ finance ministers flagged issues related to allowing input tax credit through simultaneous upload of invoices, but tax bureaucracy had opposed linking input tax credit with tax payments under GST. Subsequently, Nandan Nilekani and officials from GST Council and GSTN made presentations to stakeholders and industry chambers for their inputs regarding the changes.
As per the structure being worked upon by Nilekani and state and central tax officials, businesses having zero tax liability for six consecutive months may get to file returns only twice a year. The return filing date may be spread out and businesses having annual turnover of up to Rs 1.5 crore may have to file return by 10th of next month, while others can file return by 20th. The number of returns filed by both small and large taxpayers will be 12 in a year. The GST Council in October had allowed small businesses with turnover up to Rs 1.5 crore to file quarterly returns.