Exemption limit on procurement from unregistered dealers
Under the GST regime, requirement to pay
tax under reverse charge by registered recipient of
goods or
services in respect of procurement of
goods from an unregistered vendor has been proposed to be deferred till March 31, 2017.
Though the deferment is a welcome move, the provision should be abolished completely as the same leads to unnecessary increase in compliances and is anyways available as
tax credit thereby being revenue-neutral.
Procedural gaps to be covered
India’s largest
tax reform is yet to be fully put in place, thanks to patchy
technical implementation. Systems underpinning the
tax have been plagued with many problems that result in deadlines in the filing of GST returns now being pushed to October and beyond.
The GST Network website for filing returns is facing “issues”, throwing into disarray the return filing processes for some businesses. The common complaint among taxpayers is a very complicated
process of filing returns. The functioning of the portal needs to be improved so as to ensure that
tax compliance is not tedious for the assessees.
Advance Ruling Authority needs to be established immediately
The Aadvance Ruling Authority (ARA) can be approached to seek clarity on applicability of GST laws and rules. It should be established immediately to deal with legal issues faced by the taxpayers. This would ensure that tax positions are clarified on a timely basis and litigations are minimised.
Zero rate of tax for education and health services
Education and health services have been exempted from GST. The objective is to make education and health care economical. However, since the procurements by both these sectors are largely taxable, the end consumer is not able to get the benefits under GST.
It is recommended that that the government makes supplies to these sectors as zero-rated. This will enable that refund of input taxes will be available to such sectors and the final benefit of reduced prices will be passed on to end consumers.
Abolishing tax on advance for goods
The GST Council has proposed abolishment of payment of tax on advances received by dealers with a turnover up to Rs 1.5 crore. This step has come as a big relief to the taxpayers. The said benefit should also be extended to other assesses irrespective of their turnover. This would reduce the compliance burden on industry. Moreover this is unlikely to impact tax collection as tax would be paid on such advances as and when the goods are supplied.
(The author is partner, indirect tax and GST, PwC. Prashant Gupta & Preetam Singh also contributed to the article)
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