Piecemeal approach

One fact that cannot be disputed about Indian taxpayers is that they possess tonnes and tonnes of patience. At the end of every meeting of the GST Council, taxpayers eagerly await the final word on when GST would make its arangetram , what are the exemptions proposed and an idea about the rates of taxes applicable to their commodity or service. Every single time till date, they get disheartened because apart from what they are expecting, other things get announced.

The Government is unleashing GST in instalments. While this is understandable in a law that replaces almost all indirect taxes in the country, keeping the important bits of the law till the slog overs could result in a hurried legislation. The Model GST law which was circulated last year has undergone many iterations. The law that was passed by the Lok Sabha has altered many clauses that were present in the November version of the law.

The agricultural sector and any taxation department have never had to debate on any issues pertaining to either direct or indirect taxation as taxation laws have invariably swayed towards ignoring the sector for the purposes of taxation. Sporadic references have been made to agriculture but there was no major impact of taxation on the sector. One of the concerns that the CGST law has produced is whether agriculturists would be subject to GST.

The latest version of the law defines agriculturist an individual or a Hindu Undivided Family who undertakes cultivation of land by own labour, or by the labour of family, or by servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family.

A question that pops up is whether there are any other forms of cultivation possible which the law may have omitted. While agriculturist has been defined, neither agriculture nor cultivation has been defined anywhere in the law. To add to one’s interest, the provisions regarding registration clearly state that an agriculturist to the extent of supply of produce out of cultivation of land need not take a registration.

A combination of all the above facts leaves the agriculturist in an interesting situation wherein his profession finds a mention in the law ostensibly with the purpose of taxing but he doesn’t have to take a registration nor is the activity of agriculture or cultivation defined. So, why the definition of an agriculturist only?

The Bill adopted by the Lok Sabha has also cleaned up provisions on input tax credit which was direly needed. Transitional provisions form a very critical part when transitioning to GST; the substance of the intention of the Government to facilitate an easy transition have been retained in the transitional provisions. The only area of concern as far as the transitional provisions go is that the oft repeated “appointed day” has not yet been announced. While July appears over-optimistic, the fact that September will be the only other option should comfort the taxpayer.

As a tax, GST relies a lot on technology. Transitioning taxpayers have had to spend a lot of time during the transition process on providing information online for transition. The website of the CBEC is already showing signs of strain due to the traffic. If the same trend continues, www.gst.gov.in could well become the website on which maximum time is being spent by users.

The writer is a chartered accountant

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