Mohan Lavi

GST’s routine tweaks

Mohan R Lavi | Updated on March 20, 2020

The Council is obsessed with incremental change

One can almost predict the outcome of the meetings of the GST Council these days. The rates of tax on a few items are “fitted”, dates for filing some of the returns under GST are extended, the introduction of a proposed new system is delayed and despite all of the above, a new feature is proposed to be introduced.

The 39th meeting of the GST Council ticked all these boxes — rates of tax on mobile phones and specified parts were increased, due dates for filing the annual return and the ‘reco’ statements for the year ended March 31, 2019, were pushed to June 30, 2020, the new system of e-invoicing and returns is proposed to be launched from October 2020, and a new “ Know your Supplier” concept is being proposed.

The rates of tax on mobile phones and some specified spare parts were increased to 18 per cent from 12 per cent, matchsticks will now be taxed at 12 per cent and maintenance, repair and overhaul services of aircraft will be taxed at 5 per cent. Possibly with a view to maintain some inventory of items to change rates for the next meeting, the tax rate for footwear, man-made fibres and fertilisers was not decided at this meeting.

IT system

Considering the consistent issues they faced, users of the GST portal were in a dilemma to decide whether the IT system let down a smooth implementation of GST or whether the ever-changing laws put too many change requests on the IT system. Over time, most reached a conclusion that since laws in India will keep changing, the IT system was not tuned to add the changes and to accept returns from a mass of taxpayers on the same day.

It is apparent that the IT system is still a work-in-progress considering the fact that the new system of returns is being deferred again, e-invoicing is not being mandated for some sectors and the GSTR Form 3B — which has attained a cult status in the GST era due to the ease with which it can be filled — is going to continue till September.

The GST Council also gave a tacit admission of this fact by stating that a better GSTN system will be ensured by Infosys by July 2020.

The GST Council will ask Infosys to deploy more skilled manpower, increase capacity of hardware and rectify the 17 areas of dissatisfaction that the Council informed Infosys about, including transition issues for taxpayers in Jammu and Kashmir, Aadhaar verification and lack of scalability of the servers. Enough and more time has been given to the vendor to make the GST system robust.

A long-pending demand of the taxpayer was accepted in the Council ruling that interest for delayed GST payment would be made on the net GST liability. A new scheme called ‘Know your Supplier’ is being introduced so that the taxpayers are informed about the basic details of the suppliers with whom they transact or propose to conduct business — this also could be a sort of a mechanism to force taxpayers to deal only with suppliers who are registered under GST.

Taxpayers who have cancelled their GST registration till March 14, 2020, can file an application for revocation of cancellation of registration till June 30, 2020. The extension is a one-time measure to facilitate those who want to continue conducting the business. In what can be considered to be an encouraging sign, the GST Council appears to be increasingly adhering to the Chinese proverb: “If you want to find out about the road ahead, then ask about it from those coming back.”

(The writer is a chartered accountant)


Published on March 20, 2020

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