Goods And The service tax :: GST teething issues still haunting MSMEs - Grassroot level is the WORST sufferer

Pics : Teething Problems Encountered by the " GST " Tax filling and the Returns Tax Form Fillings 

GST teething issues still haunting MSMEs

Ever since the Goods and the Services Tax has been implied and applied to the GST the enormous tax collection has made the Government to believe that this is what has served the purpose. Well the collection might have soared and the Government is getting the revenues in all forms. That is good. The greatest advantage of the system is that the implementation of the GST has infact netted all the fishes big, small , heavy and maybe light and mini as such. But has the system implemented given many a moment of joy or is that the  SMALL , MEDIUM , AND MINI ENTEPRISES HAVE STARTED DWINDLING AWAY AND HAVE ENEDED THE BUSINESS.

 This is infact the question which is being observed by everybody to find out an appropriate answer. This requires a lot of teething problems that has surfaced to be taken care of and to see to it that it gets wiped away without much of the time lost.

GST infact is supposed to simplify all the hindrances that accrues and occurs to the tax payers and this is supposed to be a kind of ONE-WINDOW- CLEARNCE  which many refers as a SINGLE – WINDOW clearance , for payment of the same but over the years there are some glaring HITCH that has been observed and within the passage of so many a years those have not been addressed by the one’s who are responsible for the same.

The tax system should encourage the one’s to do more of a business and fing it GREAT to pay the TAXES . However it has been observed that in the MINI-SMALL and- MEDIUM scale of industries, many are finding very hard to sustain the business and many are finding a bit hard to file in the taxes. It is this arena which needs the immediate attention of the State Government and well as the Union Government to sit and address the issues and make it admirable sort of an issue for the one’s to pay the taxes.

Some anomalies and some hiccups that are observed and that has been noticed by many of the business units as well as some that one has experienced practically at the time of paying these taxes as well as some arena of concern faced by the business unit is what this article will cover up either in minutes or somewhat in detail .This is IMPORTANT as the BUSINESS UNITS of Bihar as the recent election revealed , that , it was the failure of the GST and the taxes implied upon the materials or the goods that completely shattered the GST in it’s full  form and as good as completely shattered the NDA in the election , however winning it by a wafer thin margin. The reason was enough for us to raise and write on the issue.

This holds importance for the Government of the day to read and correct itself on many a areana where there are some   teething problems that has surfaced . This requires an immediate attention as well.

MSME and the MINI SECTOR in complete quandary ::  Grassroot level is the WORST sufferer

 How to start that but I make my own effort to start with . It has been over  some times now maybe about three years, not a big time one would say but still some years now when the Goods and Services Tax (GST) was implemented. However, teething issues are still haunting micro, small and medium enterprises (MSMEs) across the country. According to the industry, thousands of notices have been served on the MSMEs in the northern region for late filing of GST returns for the fiscal 2017-18 and 2018-19 . I’m taking all the years that of late as per the reading, and the observations that I could visualize and that I could notice.

However, the computation of interest for late filing has been done on gross GST and not on net GST payable, putting the MSMEs in a quandary. When I take the MINI sector I take the payment of the taxes by the petty, small and laid back kind of the shopkeepers as well as they too are finding the grind very hard to digest at this moment.  Their business is dwindling and many are feeling the heat of the same and it is high time that the Government takes up this issues and makes it soothing rather than raking it up for all the MESS that it could create .

Industry representatives including those who run their business units and who are someway and in some manner the members of the CII  said a circular has been issued by Special Secretary, Member, Central Board of Indirect Taxes and Customs (CBIC), to the Principal Commissioners to collect tax on gross GST amount. “ Because of this, en block notices have been issued by the department for collection of interest on gross GST calculated by the adding the tax payable through ITC (input tax credit) across the region. This is causing great consternation all over the country,”  and one particular member as said  Mr Sharad Aggarwal, President, Northern Chamber of Small & Medium Industries had raised this matter to the Government of India through the proper channel requesting the Government to take immediate notice of the same. .

He said though the GST law committee has inserted a provision in Section 50(1) vide the Finance Act, 2019 that interest would be chargeable on that portion of the tax that is paid by debiting the electronic cash ledger only, still it is not being implemented by the grassroots formations.

In simple terms, the interest is chargeable on net GST payable, after the deduction of input tax credit.

Anomalies and the surfacing problems that the MSME are facing ::

According to the MSMEs, there are certain anomalies and issues in the GST Act which are causing hardships and confusion among the taxpayers.

 Feeling that their books of account especially the electronic cash ledger  always faces some lacunae and the similisation of the books of their account not tallying with the actualities that the systems has to throw upon ,  they have raised and voiced their concern, and the  representatives of the Northern Chamber of Small & Medium Industries comprising manufacturers of hand tools, auto components, valves and engineering goods recently met Minister of State for Finance and Corporate Affairs  Mr Anurag Thakur in this regard. They have sought a clarification from the government that interest, if any, is to be levied only on the net tax liability i.e. on that portion of tax only which has been paid by debiting the electronic cash ledger retrospectively from July 1, 2017.

Retrieve That The “ MSME ” are looking For - ::

The MSME which is facing a serious THREAT as of now because of too much of over taxation and in certain cases needing some collateral benefits out of the system has approached the Government of some retrieves  .

 What is the benefits and some leverages that they have asked the Government for some consideration . The members also requested the minister that since GST is a new Act the interest may not be charged for the first three years of the implementation of GST provided the delay in filling of the return is not more than two months.

 This is and this was something a , say , a mini kind of a help that they looked for. However within the mini kind of a problem there is a MAXI help and the AID that they are looking in for. What is that one might ask. I lay down the REQUEST as suggested and as the represenatives needed.

“ The representation submitted to the minister also stated that the filling of GSTR-9 had caused great confusion and complexity among the taxpayers across the country. The GST Council has been kind enough to relax several fields of the form for two years i.e. 2017-18 and 2018-19. However, for 2019-20 onwards, the return has not been simplified. GSTR-9 is an annual return to be filed once in a year by the registered taxpayers under the GST ” .

Excellency and the Primacies of the GST  :: The Pains And The Gains

This is as regarding the one’s that the MSME are facing and this requires an excellent kind of quick attention that the Government of the day needs to do.  I shall now turn my attention to the PAINS and the GAINS from the GST as collected by one of my friend who is a TAX Consultant and who always helps us to file our Income Tax and the other realted taxes that we earn for ourself paying it towards the I-T as we do not run any business.

The points clarifies the quotients and the portions of the GST and the nomenclatures that relates to the viability of excellency and the primacies of the GST 

The PAINS and the GAINS of the “ GST ” :: Easy And The Long

“ In this world nothing is certain but death and taxes” said Benjamin Franklin. The biggest indirect tax reform post-independence Goods and Service Tax turned ONE on 1st July, 2018. One year of GST implementation has not been less than a topsy turvy ride for the implementation agency, the taxpayers and the GST Practitioners. The multiple amendments in regulations, teething problem of the GST Portal, inherent issues in GST has given sleepless night to all the stakeholders. However it is rightly said “ What Comes Easy won’t last long and what last long won’t come Easy ”.

It is very much true for GST which has been implemented in India which has a Federal System of Governance and complex geographical and consumption dynamics.

Gains of GST:

1) Unified Indirect Tax: The biggest achievement of GST is that it has subsumed all major indirect tax in the country like Excise, VAT, Service Tax, Luxury tax etc. into GST. This has resulted into GST becoming a unified indirect tax law in India. Though Customs Act, VAT for Petrol/Diesel/Alcohol and other local acts are still in operation in various states, all other major indirect tax has been replaced by GST. It’s a major step towards making India – One Nation One Tax.

2) Common Market: With GST in place the goods and services are uniformly classified across the country whereby India has become a Common Market. Earlier states had different rate of tax on different goods which has made way for tax evasion and geographical incentives has further concentrated trade and industry at such places. Uniform Tax rates across the states has invited the FDI and other investments in India.

3) GST Registration: The GST law has been drafted in such a way that it’s difficult to run an entity without getting GST Registration. The low basic exemption limit for registration, compulsory registration requirement for attracting reverse charge liability, mandate to register to pass on GST tax etc. has enhance the Tax base to a great number. As against approx. 64 lacs registered dealer in earlier indirect tax law the registration under GST has gone upto approx. 112 lacs in a span of one year.

4) Revenue Collection – India’s monthly goods and services tax (GST) collections crossing Rs 1 lakh crore indicates that the indirect tax regime is stabilizing and that economic revival is too picking up pace. Further with anti-evasion measures like e way bill, credit matching mechanism etc , in place the collection is going to be robust ahead.

5) Input Tax Credit – The Seamless input tax credit is the backbone of GST. The GST implementation has paved the way for claiming Input Tax Credit of goods and services without any discrimination. Though the highest GST rate is as high as 28% excluding Cess the eligibility of Input Tax Credit has not resulted into much hike in the prices of goods and services thereby not resulting into inflationary pressure on the economy.

While the GST implementation has been successful on most front in achieving its objectives there were few loose ends in the process that has given a painful experience to the stakeholders.

Pains of GST:

1) Deficiency in Law: Multiple tax rates, varied interpretation in levy of Dual GST or IGST, negative list of ITC etc. has not been seen in good light by taxpayers. The inclusion of Petroleum, Electricity and stamp duty in GST needs to be completed  as quickly as possible and very fst as one would like it to see that according to the one’s who are in this industry, and if done and completed this year which would remove the impact of cascading to some more extent and make goods and services from India competitive.

2) Single Point Implementation: The govt. has attempted to implement GST in toto from the 1st day itself however many provisions like Reverse Charge Mechanism, Time of Supply etc ,  being new concepts made taxpayer take more time to implement and understand its implication. This was realized a bit later by the Government  and by the time they reacted ,  till then the chaos and damage has already happened. Thereafter major provisions like TDS/TCS. Reverse Charge, Time of Supply of Services were deferred till 30/09/2018.

 3) GSTN Teething Issues:.  The unprepared GSTN has given a lot of pain to the practitioners’ and the business community at large . The departure from the regular filing of GSTR1, 2, 3 to introduction of GSTR 3B has made the filing system very tedious. The filing of Transitional forms, registration module, and head wise payment system has made GST compliance very difficult. Late fees levy has further added to the woes.

4) E way Bill: Introduction of e way bill mechanism to have a check on movement of goods has not been seen as an ease of doing business. The limit of Rs. 50,000/- being a very small limit and requirement to prepare e way bill for all movement irrespective of any distance has not been hailed well by the trade and industry. Further, different states having different e way bill provisions has defeated the purpose of one nation one tax.

5) GST Refunds: The Refund mechanism for exporters, including data matching law, besides procedure governing them, have irked the sector, particularly smaller entities that saw their working capital requirement rise. Though several efforts have been made to address the issue, it may require more intervention.

Way ahead for betterment of GST:

Though NOT me as a TAX CONSULTANT of the same , but in an attempt to HELP the Government of the day, I have made some studies by asking some of those who are known to me and who deal with the job of tax filling of the GST and the I-T and they had given me some points and some addressal issue in writing which I have amalgamated in points to put them here. I jot down some of the pertinent points here.

 I might NOT be very clear in explaining certain  terminologies here in this article as these are very CONFINED COMMERCIAL TERMS used in short forms by those who deal in this job and the matter of GST and Tax Consultancies yet to help out the Government and the respective Ministries , I have and I’m JOTTING certain points here . It is for the Government to read between the lines, read the lines and formulate the easier path ot the process to make the system very easy for those who are in the business and who ought to be enthused to do the business in the most easier manner so that the jobs are NOT thrown out if these MSME’s and the petty business units finds it very hard to persists with the same.

Though GST has made vast progress from its early days of teething troubles the businesses are expecting a simpler tax filing regime, fewer slabs and a broader tax base to be addressed.

How can it be done ? . Some of the one’s who are quite an experienced hand in the matter of the same have suggested certain formulae’s and that is what is going to be explained here. These are the points that those EXPERTS have raised and I’m just jotting it here for the sake of the business to be made easy by the Government  of the day to decide and implement upon them and make the changes after a thorough and a careful study.

1) Expansion of Tax Base: GST has already bought many dealers under the tax net however with petroleum products, electricity, and alcoholic liquor still out of GST many dealers are not in tax net. Further, it is reported that only 1% of registered dealers are contributing to 80% of tax collection and this anomaly needs to be addressed.

2) Tax Slab: As many as six tax slabs, different Composition rates, Cess etc. needs to be rationalised so as to have at most two tax slabs of 12% and 18%. Multiple tax slabs result into tax evasion.

3) Unified Advance Ruling: In the recent past it has been seen that the Advance Authority constituted under GST are state wise and not centrally unified. These state wise authorities are issuing the Advance Ruling which are a bit arbitrary and at times contrasting to each other. A Central Advance Authority needs to be mulled so that Advance Ruling issued are uniform across the Country.

4) Return Simplification: The biggest agenda on the cards would be simplification of GST Return filing. The Past one year has been a nightmare for the GST Practitioner with GSTN teething issues, filing of monthly returns, matching of tax credit etc. The govt. is already working on it to consolidate and has to soon come out with a new methodology for GST Return filing.

5) Tax Payment: It has been suggested many times that instead of accepting payment in different heads and nomenclature the GST Portal should collect tax only in a single head just like PLA from where the dealer can apportion according to the need and liability. This will be a big step towards making GST Simple and user friendly.

Undoubtedly GST has supported to a large extend in formalising the economy and simplifying the indirect tax regime but a lot has to be done as it is an evolving tax legislation.

The Centre and the States needs to work cohesively and together more and fast

 The Central & the states deserve appreciation for coming together and working jointly under the aegis of GST Council which has delivered timely and implementing GST law in a federal state like ours has become a role model for other countries to follow. However more concentrated effort in this matter is required by both the State and the Centre to sit upon and for it and come to about making a very simple method to fill the GST taxes and it’s return and this is what ought to be done very quickly with the reforms and the reconstructions and applicable to and  of the taxes for the various commodities to make it more soother and to enable the DYING petty business units and the MSME to excel and grow and that would give FILLIP to a large chunk of employment.  

Well , that is it

Regards and Thanks

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Shyamal Bhattacharjee 

Mr Shyamal Bhattacharjee, the author was born at West Chirimiri Colliery at District Surguja, Chattisgarh on July 6th 1959 He received his early education at Carmel Convent School Bishrampur and later at Christ Church Boys' Higher Secondary School at Jabalpur. He later joined Hislop College at Nagpur and completed his graduation in Science and he also added a degree in    B A thereafter. He joined the HITAVADA, a leading dailies of Central India at Nagpur as a      Sub-Editor ( Sports ) but gave up to complete his MBA in 1984 He thereafter added a Diploma In Export Management. He has authored THREE books namely Notable Quotes and Noble Thought published by Pustak Mahal in 2001 Indian Cricket : Faces That Changed It  published by Manas Publications in 2009 and Essential Of Office Management published by NBCA, Kolkatta  in 2012. He has a experience of about 35 years in Marketing

Signature Of Shyamal Bhattacharjee

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