Continuous efforts being made to simplify GST system, says Finance Secretary

Continuous efforts being made to simplify GST system, says Finance Secretary

New Delhi: While speaking at a session on ‘One Year Journey of GST’ organized by Federation of Indian Chambers of Commerce and Industry FICCI, Finance Secretary Dr Hasmukh Adhia said that continuous efforts are being made to simplify the GST system in the country.

Dr Adhia added, “We have gained in the process of simplification by introducing GST, but that does not mean there is no scope for the betterment of the existing system. A lot more needs to be done.”

He further reiterated that work is being done to make GST refund process fully automatic.

On simplification of rates and slabs, he said, “We understand the need of it but we did our best in the given scenario, keeping in mind the revenue and societal concerns of economically poor class.”

Sandip Somany, Senior Vice President, FICCI and Vice Chairman & CMD, HSIl Ltd., said that Goods and Services Tax is not only the biggest indirect tax reform but also a landmark in the country’s taxation history. “Results of FICCI survey on one year of GST show that implementation of GST has been successful on an overall basis with 76 per cent respondents stating that GST had a positive impact on their business. Also, 96 per cent respondents believe that introduction of e-way bill mechanism in lieu of check posts will facilitate ease of doing business.”

Harsh Mariwala, Past President, FICCI, Chairman-FICCI Task Force on GST and Chairman, Marico Ltd., in his theme address said that GST is a complex subject involving many stakeholders. “In the long-term, it is positive for the country. It is combining very well with the overall upturn of the economy, and going forward it will evolve with a lesser number of slabs and issues related to return and refund being resolved, in at least next one year,” he said.

Sachin Menon, Co-Chairman of FICCI Task Force on GST and Partner, National Head (Indirect Tax), KPMG said, “GST will also be evolving with changing economic and technological scenario and during the evolution, rectifying the issues will give a fillip to this new tax regime.”

FICCI Industry Survey on ‘One Year of GST’

FICCI conducted a survey of enterprises on completion of one year of GST and their experience so far in this journey post-GST implementation. The objective of the survey was to gather the feedback of the industry on this significant reform, impact of GST on their business and to identify various issues faced by them under the GST regime. Both MSME and large corporates have participated in the survey and shared their first-hand experiences with GST implementation. The respondents have also made useful suggestions to make GST simpler and effective.

The survey findings reveal that most respondents are happy with the implementation of this reform, with 76 per cent respondents stating that GST had a positive impact on their businesses. The survey further reveals that industry acknowledges that during the period of transition, the government has been fairly responsive to industry’s queries and concerns raised over the last one year, with 86 per cent respondents stating that the government has taken adequate steps regarding change in rates and providing clarity on various issues through rules, notifications, issuing FAQs and guidelines.

In terms of the impact of GST on business operations, sales and employment, the survey findings are quite optimistic. 43 per cent of survey respondents stated that GST had positively impacted the demand for their goods and services as against 17 per cent who reported a negative impact.

Further, 63 per cent of the respondents stated that the introduction of the tax had impacted pricing positively, while the remaining 37 per cent stated otherwise. Additionally, even though 64% respondents stated that there was no major impact on employment post-GST implementation, other respondents cited a positive impact on the back of increased demand for the skilled workforce to comply with various aspects of GST accounting and return filing.

The supply chain and logistics have also been streamlined since the implementation of GST. About two-thirds of the respondents have reported either no change or decrease in their supply chain costs post the implementation of the survey. Furthermore, 64 per cent of respondents to the survey have cited a reduction of transportation time under the GST regime. Of these, 56% respondents cited reduction in transportation time by up to 10 per cent, 25 per cent of respondents stated reduction by 10-20 per cent and 19 per cent stated a reduction in transportation time by 20-40 per cent.

Amongst the key issues faced with respect to GST implementation, the industry has highlighted glitches in GSTN portal, cumbersome procedures and documentation, and cost of compliance as the major areas of concern that need to be addressed.

Feedback on GSTN Portal

59% of the respondents mentioned that they were not satisfied with the capability of the GSTN portal. In fact, 96 per cent of respondents felt that improvements were required in the working of the portal.

Respondents of the survey pointed out issues with the robustness and volume handling capacity of the GST Portal. Problems like the delayed reflection of updated data as well as payments, absence of the effective mechanism to resolve issues, inability to make corrections after submission of returns in case of errors were highlighted.

Respondents suggested that a major revamp of the portal was necessary to make it more efficient. Specific suggestion for improving the operation of GSTN portal include improving server capacity as well as making it more user-friendly, with an interactive interface.

Feedback on the e-way bill

E-way bill mechanism has been welcomed by industry, with 96 per cent of respondents mentioned that the e-way bill mechanism in lieu of check-post is more effective.

Feedback on GST Refund

71% respondents mentioned that they faced issues in claiming the refund of GST. They cited reasons such as significant efforts in follow up for processing of claims, technical issues in the GSTN portal, a mismatch between relevant GSTR and shipping bill leading to the inconvenience in claiming of refunds.

Feedback on Authority for Advance Ruling

Amongst various suggestions received from the respondents, one of the suggestion is to overhaul the mechanism of Authority for Advance Ruling (AAR) under the GST regime. AAR should not comprise of revenue officers. To achieve the intended objectives of advance ruling mechanism, an independent high-level Central body (similar to the one under the erstwhile indirect tax regime) be constituted as ‘Authority of Advance Ruling’ under the GST regime.

Feedback on Tariff Rationalization and Reverse Charge Mechanism

71 per cent of respondents felt that there was a need to reduce tariffs of GST in their sector of business. 89 per cent of respondents were not in favour of reverse charge mechanism on purchases from unregistered dealers.

Suggestions for Improvement

Respondents to the survey gave following suggestions for improvement in GST regime:

  1. Simplify the return filing process and minimise the number of returns to be filed.
  2. ITC flow should be seamless and the recipient of goods/services should not be penalized for non-payment of taxes by the supplier.
  3. Shipping bill wise details are not available to the assessees for refund received through bank due to which assessees are facing issues in reconciliation. Necessary steps to resolve this issue must be taken.
  4. Refund Procedure including submission of documents should be made online.
  5. Remove original invoice reference against credit note/debit note. One credit/debit note should be allowed to be issued against multiple original invoices.