The announcement last week by the Malaysian government that it would be scrapping GST got some people in India talking that we could also do the same as our GST had borrowed many concepts from the Malaysian model. In fact, the only concept that India has borrowed from the Malaysian GST system is the anti-profiteering provision that will gradually fade into oblivion.

 

The thought of India scrapping GST has to be dismissed at the thought stage, as it were. GST law in India has come to a stage where all players have quite a bit of their skin in the GST game. The GST Council cannot backtrack but should tweak the laws and move forward progressively.

The pain points

What should worry taxpayers in India is the fact that the issues in GST keep recurring. After a torrid few months, the GST portal showed some semblance of working stability. Yet, this month a few taxpayers keen to file their monthly summarised return in GSTR 3B for the month of April were treated to some magic on their screens — the numbers that they were inputting on the form kept disappearing.

The response of the Central Board of Indirect Taxes and Customs (CBIC) was to do something that has been done many times in the past — the last date for filing GSTR 3B for April was extended by a couple of days. With GST about to celebrate its first anniversary soon, taxpayers would not be asking for too much if they expect that filing of a monthly return should be simple and seamless rather than a test of one’s patience.

After a flurry of notices on the transition credits claimed, officials at the GST department are now setting their sights on input tax credits claimed. Many taxpayers have received intimations over e-mail stating that there is a difference between the input tax credit claimed in the GSTR 3B and the GSTR 2A. They have been asked to explain the difference.

It would be a very rare taxpayer whose figures in the 3B/2A would match. This is because 2A is an auto-generated form that sources its inputs from the counter-party’s GSTR 1. Hence, there can be plenty of reasons why the data in these two forms don’t match — the counter-party may not have filled the data in correctly, he may have entered wrong data or he must just keep entering the data on hold for no particular reason.

Surprisingly, the intimations received by taxpayers don’t mention what will happen if a reconciliation statement is prepared and submitted to them. Will they accept it at face value? Can they ask more questions? Can this lead to a reversal of credit taken? It is important for the intimation to answer these questions in the form of a narrative — otherwise the seeds of protracted litigation are being sown.

There also appears to be some confusion on demarcation of responsibilities between the Centre and the States — taxpayers have been made to shunt between both when they make an attempt to understand who would assess them. Frequent changes in laws and the lack of clear guidelines on their implementation have resulted in corruption at different levels. GST litigation has already begun with the Authority for Advance Rulings pronouncing a few decisions.

Quite a few taxpayers have already concluded that nothing really has changed much in the GST era — the problems and their solutions remain the same as in the pre-GST era. So, why even think of scrapping GST?

The author is a chartered accountant.

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