Easing the burden- No filing of returns in new GST model
In a simplified payment process under the goods and
services tax (GST) okayed by a group of ministers (GoM)
recently, taxpayers won’t need to file returns, making
compliance easy. According to sources, under the new
model, the IT system run by the GST Network (GSTN) will
produce monthly returns based on supply data uploaded
and inward supplies accepted.
According to a model that is to be considered by the GST
Council on May 4, there will be a facility for sellers
to continuously add invoices and for buyers to view
them. The system could allow the buyer to lock the
invoice after which seller can’t edit/delete it, making
it a confirmed liability of the seller.
Importantly, the GoM-approved model doesn’t rely on
automatic invoice-matching by the IT system. Instead,
invoice-matching, which is crucial to check tax evasion,
would be done through a ‘semi-automatic’ credit
reconciliation process. The system will periodically,
say quarterly, generate a list of suppliers defaulting
on tax payment and the tax man could focus on them. If a
supplier doesn’t pay the tax even after action taken by
the tax man, the buyers will face reversal of input tax
credit or ITC. To reduce the risk to compliant
taxpayers, “high-risk” assessees will be identified so
that instances of credit reversal are minimised. The
system would try to ensure credit flow from high-risk
suppliers by making them deposit advanced tax. |
|
The proposed model, the sources added, would still
encourage businesses to choose tax-complaint suppliers
over others by ensuring full and prompt use of ITC and
resultant lower tax liability in transactions with a
compliant unit. A key feature of the triplicate-returns
model mooted earlier — which has never been implemented
fully and stands suspended indefinitely — was the
incentive for keeping both inward and outward supplies
in the tax chain.
The new model is a fusion of the two systems proposed
after the original design failed to take off due to its
cumbersomeness. While a committee of tax officials
recommended a system where credits could be given on a
provisional basis to a taxpayer on the basis of
self-declared invoices, the GoM thought this could be
potential revenue risk. The model mooted by Infosys
chairman Nandan Nilekani also was to be hassle-free for
taxpayers as it involved system-generated returns
(rather than filed by assessees), but the ministers’
panel again felt that it lacked a provision for reversal
of credit in cases where excess/undeserved credits are
taken.
However, tax experts have doubts about the new model
cleared by the GoM as well. They say that blockage of
ITC till the buyer accepts the invoice could be a
problem for businesses as it involves cost and a change
in business practices. “A company that has multiple
verticals engaged in procurement will find it difficult
to designate a person solely responsible for accepting
invoices on a daily basis,” said Rajat Mohan, partner at
AMRG & Associates. He added that even a small business
may need a full-time employee to verify and accept
continuously uploaded invoices.
Source:::
Financial Express,
dated 28/04/2018.
|