Things have become stable, but shape of new returns a cause for anxiety: Prakash Kumar, GSTN CEO

Prakash Kumar, CEO, GSTN

While the IT system has become much stable, according to Prakash Kumar, the CEO of Goods and Services Tax Network (GSTN), one thing that keeps him awake is the shape of the new forms and complexities that may accompany them.

Excerpts from an interview:

Things have now become stable. Till two days back (March 20), we had 8.25 crore (cummulative) returns filed on the GSTN portal. For a month around 1 crore returns are being files for both GSTR3B (summary form) and GSTR1 (outward supplies). Slowly, over a period of time 95 percent filers have filed 3B return for July. In the last date for return filing in July it was 53-54 percent. More and more people are now filing returns in time. So, compliance levels are rising. For the month of February it was around more than 65 percent.

100 percent doesn’t happen anywhere in the world. Some people who have not filed returns for the last six months will anyway go out. Law says that they will be deregistered. But, that has to follow a process. They will have to be issued a notice, they will be given time to reply and after hearing them a call will be taken regarding their deregistration.

Right now, we have three lakh people who have not filed returns in July till date. These 3 lakh people will go out.

GSTR2 has been kept in abeyance. How do we take care of July-March returns? Something has to come in place of R2. How do we close this? The government is working on this. GSTR3B is only a summary, while GSTR1 is detailed. I need something like GSTR2 so that I can close my operations. I worry, because suddenly l will be given something and asked to do it in one month. That has been my fate so far.

We have GSTR2A, but a person can always say that his supplier did not upload the invoice on the portal. We have GSTR2A, which is auto-drafted based on supplier's GSTR1. But then there may be a case where I have an invoice and my supplier has not uploaded it and law allows me to claim the credit so that I can complete my cycle. Then I will be able to close whatever he has claimed in GSTR3B.

The second one is what is going to be the new return form which is going to come. That really keeps me awake. We don’t know what form, shape it will take, what complexity it will bring and then it will not be a standalone thing. I have to migrate everything into the new system.

I have no idea when it will happen. There is a GoM (Group of Ministers) on IT headed by  Bihar Finance Minister Sushil Modi. They will have to submit the report next month.

I need something, then I can develop. Software development does not happen on law but on rules and forms. The form gives how it will look like, the rules gives me how it will be processed, how it will go from one to another, how it will be seen by other party—from buyer to seller. I need that.

It all depends on how complex and different it is from the current system. One idea was how much tweaking we can do in the current system so that we can make a new one. If that approach is there, it will take lesser time. If it comes as a completely brand new thing, it will take around 5-6 months. We have given this feedback to the GST Council.

We don’t have GSTR2 (inward supplies). We did two kinds of study. One is everyone files GSTR1 and 3B. R1 you either file monthly or quarterly. So, we added to see if it is monthly for three months or quarterly to see how much you have paid/shown liability under this. Then, we check the same column in 3B. That has to be the same. What we saw was that those who were compliant or diligent, there was an absolute match. But, there are people who have shown different figures. So, now it is up to the tax officers to look at it.

The second one is more convoluted, where one has to see whether there could be a reason why there is a difference, which is between GSTR2A (purchase-related tax return that is automatically generated on GSTN portal when seller files GSTR1) and ITC (input tax credit) claim. That one cannot jump to a conclusion that there is a gap here or a person is taking more credit. The suggestion was that they should look for bigger cases why there is a difference.

We are ready for go. We have improved the infrastructure and done lots of testing. It has moved into a brand new infrastructure, where we have done testing for a much larger load. Still, we suggested the government that we should go for inter-state first, watch for two weeks, and open up for few states for intra-state as there is no empirical data what numbers (load on the system per day) will come.