The big picture

It appears only Big Data analytics can give GST users accurate information on how many times the tax rates have been altered for various goods and services and how many times the due dates for filing of returns have changed! One tends to think machine learning may take over soon and start recommending whether particular rates have to be reduced or due dates have to be extended.

Even the latest meeting of the GST Council saw“GST rates for 29 goods and 53 services” cut. Undoubtedly, the Fitment Committee is working overtime to ensure that the GST rates are comfortable; it took the trouble of reducing the rate for mehendi paste in cone from 18 per cent to 5 per cent and made temple devotees heave a sigh of relief by zero-rating vibhuti .

While this much of an attention to the minutest detail is appreciable, a concern arises whether the GST Council is missing the big picture by focusing on small housekeeping service providers offering services through e-commerce (they should now charge 5 per cent with no input tax credit).

The concept of matching of invoices was supposed to be the main attraction under the GST laws. The supplier uploads his outward invoice, the recipient his inward invoice, the portal magically matches the invoices and the input credit taken is not disturbed. The concept sounds magical in theory, but could give nightmares when implemented.

When GST was introduced in July, the concept was deferred because the portal was not even getting the basic things right. Later it was stated that the tax department would do the matching of invoices. After the recent meeting of the GST Council, it was stated that matching of invoices would be done by the supplier and recipient through a process that is not on the portal. In the meantime, credit is being allowed on the basis of the temporary Form 3B without any inputs from the counter-party.

This would only mean that scrutiny of returns would be enhanced and the department would ask more questions on input tax credit. As on date, the portal does not have a foolproof system for taxpayer-tax department interaction, which would result in face-to-face interaction — an event the GST laws were supposed to eliminate. Another issue the GST Council has to fix apriori is taking a firm stand on the process of matching of invoices. It should best be done by rolling this out for large-value invoices and assessing the pros and cons before opening it up for everyone.

The other big issue is the mayhem that has happened with exporters. Refunds are being delayed endlessly or are being rejected for routine administrative reasons. Though the concept of a letter of undertaking has mitigated the issue to some extent, getting a refund from the department is turning out to be a just another project.

One reason for this could be that GST has still not turned out to be economically positive for the Government. Ideally, the Government should park a portion of the GST receipts into an Exporters Refund Fund and ensure that refunds are disbursed quickly from this fund. The fund can be replenished regularly and can be disbanded once GST revenues become economically feasible.

Issues with the portal and complicated forms still remain to be fixed. It is time for the GST Council to identify such critical issues at the earliest instead of having to worry whether Trichoderma Viride should be taxed at 12 per cent instead of 18 per cent.

The writer is a chartered accountant

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