Amit Mitra calls for ‘complete simplification’ of systems under GST  

Kolkata, January 21

There is a need for “complete simplification” of systems under the GST regime to prevent MSMEs from de-registering themselves and falling out of the purview altogether, according to Amit Mitra, Principal Chief Advisor to the Chief Minister of West Bengal and Finance Department.

He said the GST regime is currently “complex” and there have been way too many notifications and amendments made in laws, which makes it difficult to comprehend and follow, particularly for smaller entities. The number of notifications issued to date stands at 741, of which central tax notifications are 395 and central tax rate notification is 148. The total number of prescribed forms under GST is 178 and all of this was contrary to the idea of ease of doing business which is often talked about by the Modi government.

‘MSMEs deregistering’

 “Ease of doing business is a myth as far as GST is concerned. MSMEs today are de-registering (from the GST network) as they cannot cope with it. What worries me most is that one of the largest employers of India, the MSMEs, will leave and de-register and go back to being informal with these kind of numbers,” Mitra said at an event organized by West Bengal National University of Juridical Sciences in collaboration with All India Federation of Tax Practitioner, Eastern Zone, supported by the Finance Department of West Bengal government on Friday.

As many as 65 sections and 129 rules have been amended in the last five years making it difficult for smaller entities to cope. Further, rates of 419 items in goods and 99 categories of services in GST have been changed in the last five years. Such frequent changes in rates make it difficult for IT network to process it thereby leading to greater possibility of frauds.

Talking about a presentation made by Nandan Nilekani before the GST Council in March 2020, Mitra said, the value of fraudulent transactions was estimated to be close to ₹70,000 crore. Of this, ₹38,771 crore was under the head of excess input tax credit from 42,618 cases. Another ₹31,247 crore came from under declaration involving close to 97,853 cases till 2020. Frauds post 2020 to till recently would total to around ₹55,575 crore, he said, referring to a ministry of finance reply in the Rajya Sabha. The total value of frauds under the GST tax regime is therefore estimated to be close to ₹1,25,593 crore.

“GST is riddled with potential fraud and this needs to be addressed,” he pointed out.   

Mitra highlighted the need to bring back federalism and consensus mechanism in GST, which was in place during the first three years of its inception as a tool to address issues.