Simplifying GST: Reducing data entries, educating sales tax officers are key GST measures to make ‘Make in India’ succeed

Several businessmen small and big are complaining of the GST accounting and new digital compliance procedures. We have already given examples in the previous article of the multiple heads to be entered in each bill. Indian Express spoke to half a dozen small scale manufacturers, two multinational companies and one Government manufacturer with offices across India.

The GST implementation was hurriedly done due to political compulsions. Nothing wrong with that. We jumped into the water, a little less prepared. But now we need to address the issues quickly. “There are major challenges in GST implementation” says Sunil Khanna President and Managing Director of Vertiv Energy (previously Emerson Power Network) and a multinational in India’s manufacturing sector.

Educating state tax officials is critical

“There is lack of clarity and understanding of the new GSTN Act by the officers themselves. This is seen especially with the State GST officers as they were not exposed to the Excise and Service Tax Laws. Majority of the provisions under GSTN have been picked up from the Central legislation like Excise and Service Tax” clarifies Khanna.

Exporters have teething problems too. This because of the old structure of sales tax officers who are still calling the shots. “Exporters and Deemed Exporters (Exporters from SEZ) are required to submit a Letter of Undertaking (LUT) for supplying under Zero GST Tax. Based on the Letter of Undertaking the GST officer permits the exporter to supply the goods under Zero Tax. None of the State GST officers are aware of this provision and we are particularly experiencing the difficulties in the Northern States. As such many exporters or deemed exporters are suffering” says Khanna

Why ease of business is primary to ‘Make in India’

Correlation and compliance has increased paperwork tremendously. All purchases must be credited at the time of each sale and that must be error free. The monthly payment of GST with complete account details of purchases must be tallied each month.

If you are buying from 5 states then there are 5 separate entry heads unlike one CST entry head applicable earlier. How complicated does it become when you are supplying a partly manufactured and partly assembled product with purchases from several states?

Digital raj must not replace inspector raj

The devil is in the detail. The detailing that is needed today is humongous and it needs to be digitally recorded and filed. This reminds us of the old days of inspector raj when to ensure compliance elaborate procedures were drawn out by the Indian Government that hampered the core business activity. We used to have those compliance registers back in those days.

If you did not comply the inspector would be at your factory in a jiffy. Here with digital compliance it gets worse because if you are late by a day, you are late. On record. Though late fine has now been waived you still can get a digital notice even without the inspectors visit. Digital submissions would be great if the process was made easy.

The fact is that the process is too difficult to comply with and will take its toll in the coming months. Either business costs will increase and small units will start folding up, or India’s enterprising chartered accountants will find an innovative tax evasion procedure.