Decoding a conflicting GST Act

The Western Maharashtra Tax Practitioners’ Association recently called for an all-India protest with 200 plus organisations participating against the GST Act. Here's why
Decoding a conflicting GST Act
Goods and Services Tax, even though one-if-its-kind, is still relatively young.TBC

The Western Maharashtra Tax Practitioners’ Association recently called for an all-India protest with 200 plus organisations participating against constantly changing already-complicated Goods and Services Tax. The reason for the protest was simple – to represent issues faced by taxpayers and small and medium business owners.

A background: GST

One of India’s biggest tax reforms, Goods and Services Tax, is one-if-its-kind. While many countries have adopted it, India’s adoption, considering its diversity, is much-talked-about. The intention of 'One Nation, One Tax' clearly defines the motive of the Act. The Act is governed by GST Council and is represented by the Finance Minister and representatives from all the states.

Even though the Act was carefully formulated with sub-types - Central Goods and Service Tax (CGST), State Goods and Service Tax (SGST), Union Territory Goods and Service Tax (UTGST), and Integrated Goods and Service Tax (IGST) – it has fallen short on its commitments of easier online procedures, lesser number of compliances, etc. Even though GST has proven beneficial for the end-consumer with zero contribution towards additional taxes - service tax, CST, excise, among others – the businessmen, unions, and particularly entrepreneurs are facing a big setback.

Breaking it down

Let’s understand it this way – before the implementation of the GST Act, a consumer would pay for the product or service procured and additionally would also pay for service tax, excise duty, customs duty, entertainment tax, etc. Under GST, however, all charges have been combined resulting in no financial hassles for the end consumer and making the new regime to be destination-based.

Among other benefits, uniformity in the national market and transparency of the taxation system have provided security and a better understanding of the system for the end consumer. Even though the relatively nascent tax regime aimed at making the whole system easier for the business owners, it has not managed to bring-in convenience.

Issues under the GST regime

Some of the issues faced by the small and medium business owners, as well as entrepreneurs are:

- Issues in Input Tax Credit: ITC is denied if the payment is not made to the suppliers within 180 days; ITC on business promotional expenses; very high rate of interest in the case of the wrong availment of ITC or delayed payment, etc

- Issues in E-way bill: change in validity from 100kms to 200kms; increase in compliance in case of E-invoice; minor discrepancies cause a penalty in lakhs and crores, etc.

- Issues in GST Annual Return: Complicated bifurcation in ITC; no proper workflow for Annual return, etc.

All India protest to bring tax reform

Many other complications have arisen since the implementation of the new tax regime. The major problem being that the enterprise owners and union heads find it tough to comply with all the rules as they keep changing constantly. Given this, the Western Maharashtra Tax Practitioners’ Association gave a shout-out for Bharat Band on February 26, 2020. According to the association, over 200 national, state, and regional organisations, joined the protest.

The association did not just call for the protest they also came forward with a set of over 70 recommendations for the GST Council and the Finance Ministry. The protest garnered much-needed attention to the issues in the GST and E-way bills, among others.

According to the association’s Recommendation Memorandum, it is, ‘prepared to convey the problem of trade and professional along with solution desired.’ The association’s delegation met with Finance Minister Nirmala Sitharaman on February 15 and discussed their demands.

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