Taking the sting out of compliance–Economic Times–07.10.2017

The positive aspect of the changes that the Goods and Services Tax (GST) Council has made and the finance minister announced on Friday is that the authorities are willing to listen to the problems economic agents have encountered in the rollout of the new tax. The solutions that have emerged will serve to ease the pain of compliance, but are far from perfect. Rates have been reduced in 27 items, the turnover below which a supplier can opt for the composition scheme and not pay GST has been raised from Rs 75 lakh to Rs 1 crore, people with up to Rs 1.5 crore turnover can file their returns once in three months rather than every month, and exporters will get the benefit of exemption on their inputs, although paying a 0.1% GST to enable their suppliers to claim input tax credit, till the beginning of the next financial year, after which exporters’ refunds would be facilitated by means of an e-wallet. Their stalled credits for July and August would be released soon, as well.

All this will be huge relief to small players. The government has allowed input tax credit to be claimed on a monthly basis even by those who buy their supplies from those who file their returns once a quarter.

This could mean a temporary strain on tax receipts: input tax claims would have to be honoured, even if the tax for which credit has been claimed and granted has not yet been paid to the exchequer. The government has also tried to allay fears among jewellers that they are obliged to take know-your-customer credentials for even purchases by withdrawing the circular that specified a turnover threshold for securing credentials, for the time being. This would lower the temperature that has been building up into a fever of resentment to the tax among large sections of traders.

The reality is that no country has undertaken switchover to a new tax regime without teething troubles. That said, it was entirely predictable that rushing into GST without adequate groundwork and time for economic agents to learn to comply would cause huge pain. If dance we must while yet learning to walk, let us do it with all the cheer and mutual support we can summon.

This piece appeared as an editorial opinion in the print edition of The Economic Times.
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via Taking the sting out of compliance

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