Tax trauma: 

Tax trauma: 

Context:

Glitches in the GST regime are increasing the anxiety among Indian businesses

Introduction:

• India’s biggest tax overhaul since Independence, the roll out of the goods and services tax is off to a less than desirable start.
• The GST Network, its online backbone, is struggling to keep pace with the millions of invoices and returns being filed electronically by businesses across the country.
• The government has extended the deadline for filing GST returns. But even those filing returns before the last date have struggled.
• Recently, a   ministerial group formed by the GST Council to resolve the GSTN’s glitches gave an assurance that 80% of the problems would be fixed by the end of October.

Issues:

• For an economy that is slowing down for multiple reasons, even more troublesome is the implication of these implementation stumbles for 85 lakh taxpayers now registered for GST.
• Exporters, have already alerted the Centre that the delayed timelines for filing GST returns will mean that no refunds can be expected before mid-November on input taxes paid in advance and the integrated GST levied on goods they imported.
• By their reckoning, as much as Rs. 65,000 crore of working capital will get blocked, cramping their ability to ramp up capacity and raw material procurement in time for festive season orders from around the world.
• The GST regime is turning out to be neither simple nor friendly for taxpayers.

Government’s stand on this:

• The government has asserted that many exporters’ funds were blocked for five-six months even before the GST.
• Solution to speed up refunds is being worked out.
• Those producing only for the domestic market are no better off.
• Though the deadline to file the relevant return has been extended to October 31, initially only those who filed by September 28 were to be allowed to revise their credit claims.
• While revisions will be enabled from mid-October, the tax department is already examining some of these credit claims, triggering unease among firms.
• Several revisions in deadlines, tax and cess rates, rules, clarifications and tweaks later, the GST regime is turning out to be neither simple nor friendly for taxpayers.