The month of April 2018 marked the end of the fiscal year of 2017-2018. Almost a year ago, the government, amidst all the backlashes launched the Goods and Services Tax Act. The government has since then struggling to make the regime and its compliance easier for the taxpayers of the nation. However, the GST Council has been able to amend some of the highly required processes in the regime. But still, there are some lagging regulations in GST, ambiguousness of which has made the taxpayers annoyed of the new taxation system.
As of now, if you have dissatisfaction with the process of refunds or credit claims, then you have successfully surpassed the intricacies of the regime. You’d be surprised to know the fact that millions of refund are still pending with the government. This has made the businesses slow and unproductive. Besides the problem of credit claims, there are some other areas in the regime where the government needs to implement a foolproof strategy in order to facilitate the taxpayers. Here are some of the major problems faced by the businesses:
E-way billing mechanism
For an instance suppose that you have a business and there is a daily transportation of goods and services is involved in it. Now imagine the transportation vehicle getting a bill for every 50 kilometers it moves. And above all that, consider the maintenance of the bill records to be used at the time of filing the Goods and Services Tax returns. This involves a lot of time and also adds to the hassle of GST that is already making the businesses weak.
The big firms like FMCG would have to face some inexplicable problems in case the portal crashes again. And not only the big firms but the small companies with low turnovers would also be affected the same. As per the developments made by the authorities in the GST regulations, the portal would now be able to handle around 75 lakhs e-way bill in a day. Although the government sounds promising, the actual acid test would occur when there will be the abundance of transporters for the e-way bill.
On the other hand, few fraudulent businesses are tying a whole bag of tricks to dodge the e-way billing system. The dishonest actions like:
1. Taking a load-off midway to avoid the security checks.
2. Manipulation of the bill at the time of return filing.
3. Hiked Input Tax Credit
The transitional credit claims
Since the GST regulations came into effect, many businesses including a considerable number of exporters have been exploring all avenues to get the refunds. But, in return, they have only been dismayed. Surprisingly, the government took measure to facilitate the long-waiting taxpayers with the hope of getting their refunds back. But first, you must know the reason why the government obstructed the credit of refunds.
1. More than 69% of taxpayers have been found involved in filing fake returns.
2. Most of the businesses manipulated the invoices in order to reduce the payable tax.
3. The manufacturer-distributor conspiracy led to the exploitation of the records of the good and services being sold and purchased.
Envisioning the pre-existing backlashes in the GST rates in India 2016/2017, the government first cross-checked all the pending refund claims. Post-examination of the claims, the authentic ones were given the credit. And this time the government didn’t rely on the sluggish technological process but did everything manually. The Central Board of Excise and Customs formed a team that looked after the entire refund process and ended up crediting more than INR 12000 crore to the taxpayers.
Inhibiting the profiteering measures
Have you ever gone to buy something and got surprised by seeing the hiked price? And even got further surprised when the shopkeeper put the entire blame of high price on GST. It’s something that has been happening for the past 4-5 months. Many businesses have been obstructing the benefit of the input tax credit to the customers.
When a company pays tax on inputs, it launches the product at a high price in the market and claims back the amount paid on inputs. Hence, the manufacturer is supposed to provide the product to the customer after eliminating the refund amount received by the government. But that hasn’t been happening so far. The customers have been tricked into this process and the manufacturer has been getting double-benefit. So, to bring fairness in the process, the government has formulated an anti-profiteering body that will take care of such issues.
The regime is evolving at a fast pace but there are various processes left behind unsorted. The government must consider correcting the core issues of the regime and then focus on the revenue collection.