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Saturday, July 21, 2018

Goods and Services Tax: Clearing the decks for smoother transition to new indirect tax regime

While July 1 roll-out date has been confirmed by the govt, India Inc’s concerns remain unresolved on issues such as e-way bill

Written by Mahesh Jaising, Mamatha Anand | Published: June 20, 2017 2:23:03 am
 GST, GST clearance sales, GST sales, GST Council, GST implementation, GST rollout, Final GST rates, India News Clothes Shops for Stock Clearance Sale for GST in Mumbai. (Express Photo/Ganesh Shirsekar)

With the roll-out of the goods and services tax (GST) being less than a fortnight away, the businesses and common man have been hopeful of the GST Council ironing out the last few creases to pave way for a smoother transition into GST.

While the Council has issued tentative rates of GST that would be applicable on goods and services, there have been vehement representations from various quarters of the industry ranging from information technology (IT) hardware to footwear industry to have a re-look at the prescribed rates.

Also, the rules issued pertaining to e-way bill has been complex and cumbersome to implement, hence, against ease of doing business. Therefore, the industry had urged the government to do away with the e-way bill, given that the authorities would have control over the transactions effected under GST, owing to the robust GST network.

In light of above background, the 17th meeting of the Council assumed significant importance, as the businesses had been hopeful of finalisation of final rates and contentious issue of e-way bill. The GST Council met on Sunday amid the echoing plea of the industry that GST implementation be deferred to a later date than July 1.

The Council has announced that there would be no deferment of the roll-out date and the stage for an official launch is all set at the midnight of June 30. However, to facilitate easy transition for the businesses into GST, the government has relaxed the requirement of filing of returns under GST for the months of July and August and introduced a new and simplified form 3B (self-declaration), which would be filed by August 20 and September 20, respectively. The GST Council has extended time for the trade to submit invoice-wise details for the first two months. The announcement to relax filing of statutory returns is welcome. However, the fine-print of the self-declaration would have been analysed to ascertain the simplicity of the same. Also, it is hoped that there is no surprise in the form of credit being denied, directly or indirectly during the first two months.

The GST Council has also reiterated that the GST Network (GSTN) would re-open the registration portal from June 25 for seeking new registrations, thus ensuring the business are all on-board for GST. Finance minister Arun Jaitley has shared data that 81.1 per cent of current assesses (either value-added tax or service tax) have already obtained the GST registration. There has been an assurance that registrations throughout the month of July shall also be granted and this should not affect the supplier of goods/services to be GST compliance, issue invoices, claim credit, etc.

With the GST Council providing the relaxation to the assessees and clearing the subordinate legislation pertaining to advance ruling, assessment/audit, appeals/revision and anti-profiteering with an exception of e-way bill, all the decks for GST roll-out now stand cleared. On the issue of e-way bill, the GST Council has stated that in the absence of consensus on the same, no decision was taken and the said topic would be taken up in the subsequent meetings.

The move to defer the implementation of e-way bill is welcome, as the e-way bill in its current process would have been cumbersome for the trade and requires considerable efforts by industry to prepare for the automated system. However, the concern of industry remains unclarified as to whether there needs to transport documents until the time the new e-way bill rules come into vogue. Should there be a requirement to run the current format of state-level transport documents that would be extremely difficult and cumbersome?

Core to the success of GST has been the readiness of GSTN of the government. While there have been divergent views emerging on the readiness of the network, the government, time and again has re-assured that the GSTN is well-equipped and is ready for implementation. Thus, with all crucial GSTN being ready, most of the states having passed the GST laws, and lastly with all subordinate legislation being in place, India’s tryst with July 1 for implementation of GST is all set.

Despite the above, the final rates of GST are important for the trade to be all ready from July 1 and it is understood that the rates are still being finalised. While we do have the tentative rate lists, unless the GST rates are finalised at the earliest, it would be a herculean task for the industry to be fully geared up for GST. As the saying goes, the devil lies in the details — industry, hence, awaits the final list, before making crucial decisions around pricing.

Both the government and the industry alike have put in stupendous efforts towards the implementation of GST at their respective organisational levels. At this juncture, while there is now no scope for any speculation on the date, it is fair to state that industry still has miles to cover in the next 12 days!

Jaising is partner, BMR and Associates, and Anand is director, BMR and Associates

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