India is witnessing a History in Making. It is the biggest Tax reforms ever and going to affect 125 Crore Indian in one form or the other. Moving from the existing Indirect Tax Regime to a new Goods and Services Tax, with big claims that this will promote ease of doing business motto as GST is a user friendly tax.
Every journey begins with the First step forward and GST is not a destination, it is a journey. The very first step is GST Migration. The existing tax payers are required to migrate to the new tax regime through a much publicized Goods and Services Tax Network – GSTN Portal. The migration was expected to be very smooth and easy, however, the public at large is facing many technical issues while migrating. The tall claims that migration is simple and easy are proving to be a Myth. Majority of the small businesses have not been able to successfully migrate due to one or the other reason. Even meager issues like punctuations or mis-match of names in corresponding PAN Card or Aadhar Card or any such document arising out of father’s name or middle name creates an issue which does not allow the existing tax payer to migrate into GST.
According to the data as made available on the official website of the Government www.cbec.gov.in as on 8th April 2017, the migration figures break the Myth.
The figures reflect the abysmal performance of the Central Excise officers is getting the manufacturers as well as the service providers migrated into GST. It mentions the provisional IDs issued till date Zone wise. Out of these how many assessee have activated using the said ID. The figures also mentions about the actual no of complete migration in figures as well as percentage. One can see that as on 8th APRIL 2017 only 3.55 % of Central Excise registered assessee have successfully migrated on GST portal. Whereas out of 12.89 lakh service tax registered assesee, just 77,801 have migrated this is equivalent to app 6.03 %. In other words, 96.45 % of manufacturers and 93.97% of Service providers have not migrated. Thus there seems a myth that majority have migrated.
: Please note: These charts were downloaded from www.cbec.gov.in few days ago, but they have been removed from the site as of now. But in the world wide website regime, traces are always left behind.
THE MINDSET AND MONEY
As expected, this abysmal migration figure has resulted into a Pressure from the Top CBEC Officials to all the In charge Chief Commissioners and Commissioners Pan-India. This has in turn resulted in pressure down the stream as per hierarchy. Now the Range officer or Sector officers are supposed to achieve the results. Here is where the Mindset comes into play. The Central Excise officer or Service Tax officer calls the assessee in his old authoritative Tone, thereby communicating the dire consequences of not migrating. A phone call or any such communication from the department creates a panic situation in the minds of the assessee, who wants to avoid confrontation with the officers at any cost. Thus, he calls his Tax practitioner and tells him to do the needful at the earliest. Here is where the Money comes into play. As the tax practitioner is over occupied with a huge backlog for migration, he raises his professional fees. Reliable sources say that professional fees charged for GST migration may vary anywhere between Rs.2000 to 5000. The total no of migration is expected to be around 80 lakhs. Assuming that only 70 percent of them need professional support and services, the figure is almost 56 lakhs. If minimum amount per migration is Rs. 2000 than the total cost of this GST migration is a whooping Rs. 1120 Crore. This is what people will shell out for migration. 1120 Crores is not a small figure and it’s the cost to the Nation as this is the amount which will be spend by small and medium size firms as they do not have their own in house staff to handle it.
THE MOOT QUESTION
Could this situation be avoided? Is there any solution for the same? Yes, there is a very simple solution to this precarious situation. Every problem has a solution, hidden inside the problem. Every question has an answer in the womb of the question. The fundamental issue is to ask the right question.
Let us understand why migration is required at the first stage and what the position of law is. According to GST provisions on the appointed day, every person registered under any of the earlier laws shall be issued a certificate of registration on a provisional basis in such form and manner as may be prescribed. This certificate of registration issued shall be valid for a period of six months from the date of its issue and the said validity period may be extended for such further period as the Central/State Government may, on the recommendation of the Council, notify. Further every person to whom a certificate of registration has been issued shall, within the period specified under the law, furnish such information as may be prescribed. On furnishing of such information, the certificate of registration shall, subject to the provisions of law be granted on a final basis by the Central/State Government. Thus it is evident that even after Migration, you are given a provisional registration certificate and will have to submit information and details and thereafter will be given a final GST registration. In other words, after all this hue and cry you are not getting a final GST registration certificate.
AUTO MIGRATION IS THE SOLUTION
The Government cans easily AUTO MIGRATE all these existing tax payers as majority of the data and details are already with the respective departments. Whatever additional details are required can always be furnished later. Only after ascertaining all the details and data, the final registration in GST should be given, which is exactly according to the GST provisions. You can always ensure before alloting Final GST Registration Certificate.
Auto Migration is nothing new nor requires any rocket science. In past too Central Excise department has done the same when they moved from physical to electronic filing. Many government departments have done the same in past in one or the other way. It is a child’s play for IT Czars like Infosys to create a patch for auto migration with support of GSTN. Even at an additional cost, it is an exercise worth doing.
Auto migration to GST will be a boon is many ways as it will help the Tax officials to concentrate on other important aspects of GST and reorganization. The Government can easily create such a system and save the nation of the unnecessary waste of money, time and energy.