Opinion

Point given

Mohan R Lavi | Updated on January 09, 2018 Published on November 09, 2017

How compliance rating can boost GST

The makers of GST had envisaged it to be a game-changer in the way indirect taxes are collected, set-off and paid. They had also envisaged that GST would soon be embraced by millions of taxpayers who were either already under the erstwhile indirect taxes or joined the population of taxpayers only because the GST law seemed to encourage businesses to deal with taxpayers who had a GST identification number over those that didn’t.

One such provision is Section 149 of the CGST Act which states that every registered person may be assigned a goods and services tax compliance rating score by the Government based on his record of compliance with the provisions of this Act. The goods and services tax compliance rating score may be determined on the basis of such parameters as may be prescribed. The goods and services tax compliance rating score may be updated at periodic intervals and intimated to the registered person and also placed in the public domain.

Though the parameters for compliance rating have not been notified, they are expected to be based largely on factors such as paying taxes and filing of returns on time, and also on some intangible factors such as dealing with registered taxpayers. A minimum compliance rating score could be expected to be a parameter while bidding for tenders and auctions. A good compliance rating could probably assist in getting penalties waived. Some notifications on the compliance rating can be expected once there is stability in the GST laws.

The first four months of GST have been tumultuous. Due dates for filing returns have been extended so frequently that the taxpayer has lost track of them; matching invoices is making taxpayers mistrust accountants of the entities they are transacting business with; there is no clarity on whether interest has to be paid or not on late filing of returns; and there have been issues aplenty for exporters.

Indeed, the only activity that is happening on the portal seamlessly is paying any sort of tax for any transaction at any time. If the initial issues in the implementation of GST are not fixed at the earliest, at some point of time the taxpayer is going to ask, “Is GST worth all this trouble and pain?” The day he decides that the answer is ‘No’, he is going to look at alternatives to conduct his business transactions by working around the provisions of the GST Act.

Accumulating rating points

One of the methods by which the tax department can encourage the taxpayer not to lose hope in the GST portal and continue engaging with it is to reward him with some points now which can be added to his compliance rating score when the provisions are notified. Apart from relaxations in filing of returns, there are no carrots right now for the taxpayer to remain excited about GST.

Points could be provided to every taxpayer for filing of returns, payment of taxes and responding to queries posed by the department. Accumulated points could be added to the compliance rating of the taxpayer later.

There is nothing better than rewarding an Indian taxpayer for reposing his faith in the tax department when times are tough for both the taxpayer and the department.

The writer is a chartered accountant

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Published on November 09, 2017
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