Finance Secretary Hasmukh Adhia today said Goods and Services Tax (GST) has entered a “smooth phase” within a year of its roll-out, with “pretty good” tax compliance and the effort would now be to simplify tax return forms.
The biggest tax reform since Independence, the GST was rolled out on July 1, 2017, which subsumed over a dozen local taxes. It transformed India into a single market for movement of goods and services.
Over 1.11 crore businesses have registered themselves under GST. The average monthly compliance of return filing and tax payment is going up in a staggered manner and over a period is expected to be around 96 per cent, Adhia said.
Adhia, in an interview to PTI on one year of GST, listed the benefits of the new tax regime, saying it has reduced a plethora of taxes, removed the cascading effect of taxation and state check post, increased the taxpayer base with much less possibility of evasion and brought about end-to-end electronic filing.
“Of course, for any new system, there will always be initial glitches. These glitches were also mainly on account of lack of information and so the moment the information gap was removed, people felt more comfortable. I think all the glitches are over and we are in a smooth phase of implementation,” said Adhia, who also holds charge as Revenue Secretary.
Asked what would be the focus in the second year of the GST regime, the Secretary said tax officers are working on a single page return form which will be modular in nature and “user friendly”. “This year’s main agenda would be to implement the new and simple system of filing of returns,” he said.
Asked about critics saying that GST has not led to the intended formalisation of the economy, Adhia said the data suggests otherwise, as the number of people coming into the tax net has gone up post the roll-out of the new indirect tax regime.
Pre-GST there were about 60-65 lakh businesses who were migrated and the remaining (nearly 48 lakh) are all new. So this many new dealers or businesses coming into the tax net, and that percentage wise is quite high. If it is not formalisation, what is it?, Adhia questioned.
He said 25 per cent of the businesses that file GST returns have zero tax liability and, hence, file returns with a lag, as there is very less penalty.
Compliance is pretty good. There is only a delay in compliance. For July 2017, of the people who were supposed to file GSTR-3B, 93.63 per cent had already filed over a period. But if you consider March 2018, 79 per cent had filed. Over a period, all these percentages would be 96 per cent, Adhia said.
He said 94 per cent of registered businesses had filed returns in August and the number was 92 per cent for September, for October it was 89 per cent, November (86 per cent), December (85 per cent), January (83 per cent) and February (81 per cent). It (percentage of return filed) keeps on increasing over a period. So compliance is pretty good now, the Secretary said.
Elaborating on the simplified return form, Adhia said the one-page return form will be modular in nature. So if you are a B2C (business to consumer), then many of the sections (in return form) will not open for you at all. If B2C, then only one form will open, a small table. It will be user-friendly, he said.
He said the return form will have two sections -- a table to show tax liability and the input tax credit (ITC) being claimed, and another part where there will be invoice-wise details to be uploaded in a tabular form, which B2B (business to business) has to fill.
The GST Council had in its last meeting on May 4 approved the design of thenew return forms. It was decided that the current system of filing summary returns (GSTR-3B) and final sales returns (GSTR-1) would continue for six months.
Post that, a new return software would be ready and in the second phase, the new return would have facility for invoice-wise data upload and also facility for claiming input tax credit on self-declaration basis, as in the case of GSTR-3B now.
During stage 2, the dealer will be informed about the gap between credit available to them as per invoices uploaded by their sellers and the provisional credit being claimed by them. After six months of phase 2, the facility of provisional credit would be withdrawn and input tax credit would only be limited to the invoices uploaded by the sellers from whom the dealer has purchased goods.