Questionable Policies of Government.

The Ministry of Finance has multiple objectives.  One of these objectives is to simplify the compliance process for the taxpayer. While ostensibly attempting to do so, policymakers sometimes at times end up achieving the contrary and add to the complexities that already burden the hapless taxpayer.  A case in point are the new rules aimed to curb tax evasion.  These guidelines have only resulted in creating further hardship for all taxpayers of the country.   

The inability to provide input returns on time in the case of GTN Since GSTN has resulted in a few instances of the falsified claim. The GST council introduced measures such as restricting the amount of input credit claims to a cap of 110% of the input return and reflected in the GSTR 2A. After this move, the maximum input that can be claimed by any taxpayer will be 10% more than the input credit available in GSTR 2A.  As a result of this change, taxpayers must make payments in case there is any shortfall in monthly GSTR 2A.  The motivation for the introduction of these rules by the GST council is to reduce claims based on falsified inputs. Credits on account of input are available to the taxpayer only when the vendor uploads the correct details of invoices in the GST Portal called GSTR 1. Thus if vendors fail to upload accurate invoices on time at GST Portal, the taxpayer will not get the benefit of input credit. Further, for vendors whose turnover less than  Rs. 15 Mn, the requirement to pay tax is monthly, but the need to upload tax return is quarterly. Thus taxpayer cannot get any monthly input credit in the following three scenarios.

1.                       Vendors files GSTR 1 every quarter

2.                       Vendors don’t file or delay in filing GSTR 1

3.                       Vendors register GSTR 1 with incorrect details

Hence, the genuine taxpayer stands deprived of the eligible input credit as a result of the imprudent rules that restricting input credit. Additionally, the taxpayer has the burden to maintain the complete reconciliation of input credit available in GSTR 2A with his books on a real-time basis. These requirements result in increasing the difficulty of already the harried taxpayer.     

To promote the digital economy and to stop cash or parallel economy, the government has introduced new laws in the previous year's budget. These new laws mandate that three payment options for taxpayers having more than Rs 500 Mn. The payment options are:

1.       Debit Card powered by RuPay

2.       Unified Payments Interface (UPI)(BHIM-UPI)

3.       Unified Payments Interface Quick Response Code (BHIM-UPIQRCode)

In the event, taxpayers are unable to provide the above-mentioned payment options, they are liable to pay a penalty of Rs. 5000 per day.

Ironically, while on the one hand, the government is driving the march toward a cashless economy, and on the other several government agencies deal only in cash, an example of which are city buses owned by the state transport department. Their turnover of these corporations is far more than Rs 500 Mn.  The government should first make sure that all government agencies are doing cashless transactions. Further, the new law should be made applicable to retail traders in addition to all other businesses.  The daily maximum limit of UPI transactions is Rs. 2 Lakhs and in the case of ‘Business to Business’ dealings. The quantum of each sale will typically exceed Rs. 2 Lakh.  Thus businesses where transaction value more than Rs. 2 Lakh require to provide above payment options to their customer even though it will find no practical use.  One expects that the policymakers thoroughly assess these implications and issues and perhaps restrict the scope to cover only the retail trade.

The GST portal is not able to take the load on the last date of monthly return even after the passage of close to three years since its launch. The taxpayer and their consultants continue to struggle to file monthly GST return due to the operational inefficiency of the GSTN system.  Instead of making efforts to upgrade the technology of GSTN, the government seems to come out with more unusable ideas.  They had taken a view to apply different  due dates for  India for North and South India treating them as two separate regions.  Consequently, GST is no more one nation and one tax.   It is multiple due dates for multiple states with different procedures and norms. 

It is our humble appeal to The Honourable Prime minister and Finance minister to pay heed to make policies that are practical and reduce the burden of the taxpayers and encourage compliance. We are hopeful that the government will consider such inputs and commit to simplifying the tax compliance process and alleviate the hardships faced by the taxpayer.