GST Returns – Issues Yet to be Resolved

The Government intends to introduce the Goods and Services Tax (GST) at the earliest possible opportunity. GST will subsume many indirect taxes at the Central and State level. It envisages a single taxable event, i.e., supply of goods and services, taxed simultaneously by both the Centre and the States. GST will be self-assessed destination based taxation system.

In any self-assessment system the submission and processing of return is an important link between the taxpayer and tax administration. A Tax Return is an important tool for: (i) Compliance verification by tax administration; (ii) Providing necessary inputs for taking policy decision; (iii) Management of audit and anti-evasion programs of tax administration; (iv) Finalization of the tax liabilities of the taxpayer within stipulated period.

The GST Committee set up by the Government has proposed that there will be common e-return for Central GST and State GST. Every registered person is required to file a return for the prescribed tax period. A return needs to be filed even if there is no business activity (i.e.Nil Return) during the said tax period of return. Total of Eight types of returns are proposed for assessee depending on their nature of activities.

A new GST portal would come in place which will be common for all assessee. The assessee would be required to file Returns only through electronic modes. This proposal will create hassle for people doing business in remote areas where internet is yet to reach. Also, people who are not tech savvy, will be required to take help of professional for return filing.

One proposal made by the committee is that there would be no revision of returns. Now this may turn out to very unpopular and impractical move. If a person has committed a mistake, he must have some option to correct it within reasonable time. At present, Service Tax, Income Tax, VAT laws allows revision of return. Thus, such proposal if accepted, it will create unnecessary litigation and altercation between trade and tax department.

After the GST Return has been uploaded onto the GST Common Portal, the automated system will undertake the following activities: (i) Acknowledge the receipt of the return filed by the taxpayer (ii) Forward that GST Return to tax authorities of Central and appropriate State Govt. (iii) The Input Tax Credit will be confirmed to purchasing taxpayer in case of matched invoices. (iv) Communicate to the taxpayers through SMS/e-Mail, about the macro results of the matching. Reversal will also take place where credits are not matched.

The proposal to deny the credit due to invalid returns filed by counterparty supplier is a regressive step. It is not possible to verify or to control returns and details submitted every vendor. Historically, small assessee constitutes large numbers of taxpayers, and they are not impeccable in the compliance of taxes. This was the reason for bringing RCM in various sectors. Now to deny credit of assessee because of fault of his input or input service supplier seems bit harsh. Let us hope that new taxation system irons out its flaws before it is administered.

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