Interim Budget 2019 was neither a vote on account nor a complete Union Budget. It was an election manifesto with some financial statements thrown in. The entire package waxed eloquent about the past four-and-a-half years, dreamt optimistically about the next ten years but maintained a stoic silence about the present.
On indirect taxes in general and GST in particular, one did not expect much from the Finance Minister and he did not disappoint, making only passing references to GST. Nothing was mentioned about the travails taxpayers faced in the initial years to obtain refunds and just about anything on GST. Budget 2019 did not finalise the proposed reliefs to the real estate sector as a committee’s report is awaited. GST aims to benefit small traders, manufacturers and service providers in many ways. Exemptions from GST for small businesses have been doubled from ₹20 lakh to ₹40 lakh.
Small businesses having turnover up to ₹1.5 crore have been given an attractive composition scheme wherein they pay only 1 per cent flat rate and have to file one annual return only. Small service providers with turnover up to ₹50 lakh can now opt for the composition scheme and pay GST at 6 per cent instead of 18 per cent. More than 35 lakh small traders, manufacturers and service providers will benefit from these trader-friendly measures. Soon, businesses comprising over 90 per cent of GST payers will be allowed to file quarterly return.
Despite the fact that total GST revenues are yet to reflect a positive pattern, the Budget estimates for 2019-20 project significant increases (see Table). In a year in which the focus of the government would be diverted to the elections for a few months, there will be only two possible ways to achieve such double-digit numbers — greater compliance by taxpayers or aggressive assessments by the tax department.
Greater compliance can be ruled out as, by now the Indian taxpayer has figured out whether to remain in the GST system or beat it. As for aggressive assessments, taxpayers would expect to have a proper process in place to appeal against assessment orders. The GST Appellate Tribunal (GSTAT) was officially formed only towards the end of January 2019 and would be located at Delhi with regional benches expected to be formed soon.
The government should move fast on the formation of these tribunals as GST laws are still being interpreted in different ways by different people and the Authority for Advance Rulings is not only giving contradictory orders but also showing clear signs of leaning towards the department — these would only result in litigation.
Both direct and indirect tax lawyers would vouch for the fact that justice is received only at the tribunal stage. If the constitution of the tribunal is compromised, taxpayers would opine that the biggest tax reform that was supposed to create one market has become a taxpayers’ nightmare in every market.
The writer is a chartered accountant.