GST at 5: Accountants still confront major issues in filing returns

Also Read: GST at 5: A structural, economic analysis and prescriptions

Today, the law only says that if GST has been wrongly paid to the Centre, there will be no interest liability and if tax has been wrongly paid to a state, it will be refunded.

Moreover, there is a constant doubt still over the applicable rate of GST that makes it difficult for chartered accountants to file returns.

“There are a lot of confusions in terms of the rate of GST and till date nearly 400 rate amendments have been brought in by the government from time to time,” said Gaurav Gupta, a practicing chartered accountant and advocate.

He cited an example.

“If I want to reverse an input tax credit (ITC) for a client today that he had paid previously in 2018 and 2020…even if he pays that ITC, there is no mechanism by which it can go to the GST portal," said Gupta.

He says that a growing gap between GST officials and taxpayers has complicated the process of filing GST returns.

There are many CAs who share similar problems.

“It is very hard to find the address and location of GST jurisdictional officers as there is no information available online, or the information is not updated,” said Surbhi Singhal, another practising CA.

Glitches linger

Under GST, authorities were set up in each state to issue advance rulings clarifying various issues in order to enable smooth implementation of the system and provide certainty to assessees.

Apart from the poor quality of these rulings, a serious issue has arisen because of conflicting rulings emerging from different states.

While the government, recognizing the problem, enacted provisions for a national-level body to resolve such disputes, the authority is yet to be established.

Accountants pointed out that in case they make an error or find an error in filing GST returns, there is no system in place to rectify that.

“There is little to no room for correcting any inadvertent errors in filing of returns,” said CA Singhal, quoted above.

There is a separate section, 122, for general penal provisions. Application of the section becomes difficult because it is not always possible to draw a line between willful offences and inadvertent ones, accountants said.

“There needs to be a scheme or other mechanisms, where taxpayers can get to clear or revert on any such issue or glitch,” said Gupta.

Lack of communication

One of the major issues with GST is that there is no clear communication from jurisdictional officers.

“At times, new notifications are released on the portals and at times, they are mailed separately to the taxpayers. So, there is a mixed mode of communication that creates a lot of confusion. There is no single mechanism to communicate directly between the officers and taxpayers,” added Gupta.

The hybrid mode of communication and duplication of notices create additional confusion.

“The working of the GST department is very opaque due to which there are GST cancellation applications pending for years (without any observation or documentation requirement),” said Singhal.

Help desk of no help

Little accessibility to the GST helpdesk complicates the situation.

“We are frequently getting complaints of GST registrations being cancelled by the GST department for non-filing of GST returns even where the returns have been filed. To revoke such cancellation, the professional is then required to visit the department,” said Singhal.

“The GST toll-free helpdesk almost always asks the taxpayers to call the CBIC helpdesk for troubleshooting/ help; and the CBIC helpdesk directs them back to the GST helpdesk. So, in effect, there is no reliable troubleshooting mechanism,” she added.

CBIC stands for Central Board of Indirect Taxes and Customs.
.

Technical glitches

After its introduction, GST’s IT infrastructure posed the biggest challenge for taxpayers. Although the IT setup has become smoother over the years, technical glitches persist.

“IT issues got resolved a lot by 2019, yet till date, it takes (a long) time to upload the data,” said Gupta.

Two different models – 1 and 2 -- were offered to the states to operationalise the IT infrastructure . Model 1 states had the leverage to create custom-made reports and analyses, but Model 2 states had to depend solely on pre-defined reports made available by the GST Network.

This created differences in the processes followed by states.

What next?

One of the most-publicized benefits of GST was complete automation that would minimize revenue leakage, eliminate bogus transactions and facilitate ease of doing business.

Some taxation forms that were intended to be introduced in the transition are yet to be rolled out five years into the regime, and a truncated form for filing returns is still being used.

And despite various technological advancements being implemented over the years, the portal still needs more rectification to make the process of filing returns easier.

“Apart from a fully automated system being incompatible with the low level of digital access in segments of the Indian business community, the GST portal has itself been unable to reach a stage of complete implementation even at the present date,” said one accountant.

Accountants also suggest more clarifications in terms of definitions under the GST law. According to them, the GST law, despite borrowed from the erstwhile service tax regime, and /or an extension of Value Added Tax laws, has posed a challenge with the emergence of concepts like “supply” replacing “sale.”

The definition of supply being broader and more complex in scope has led to difficulties in ascertaining whether or not supply has indeed taken place.

And finally, accountants suggest that to address persisting Centre- state disputes, India should set up a system like the one under the sales tax regime to address issues over whether the Centre or a state has the right to tax the sale of some goods.