The extraordinary force of the government to streamline all the taxes in India and overcome the ill-effects of the earlier taxation regime has come a long way now. With several bumps and bruises, the journey has been a lot intimidating than it was perceived to be. However, the government has been making noteworthy changes in the Goods and Services Act in the past but the outturn has been somewhat less satisfying.
The registered taxpayers not filing returns
There are many reasons behind the people not filing returns. Surprisingly, in this case, the blame game does not entirely falls on the new taxation regime but has some other lousy factors that are accountable for it. Here are its three aspects:
- Sometimes the people, besides being registered under GST, do not have enough business in order to file returns. And adding to the non-filing structure of the people, GST rules play no role in it. In fact, some of these businesses did not have enough income earlier as well. Thus, filing for the returns goes completely out of the option for such businesses.
- In some cases, the people do not file returns because of lack of knowledge. The businesses, mostly SMEs, are not able to comprehend well with the rules and regulations of the new taxation regime. They primarily think that if they do not file a return in the case of no sales, there would be no effect on the overall taxation records. And that is completely untrue. Even if you have made no sale in the month, you are supposed to file a nil return so that the government could ultimately keep the track on the revenue collections.
- And the lamest reason linked with this entire non-filing returns attitude of the people is that it has become a habit for most of them. Just because the earlier regime was less scrutinized, the people have hanged their hats in the house of non-compliance. Perhaps, the strict rules and complicated GST rates are an inventive way to bring the people on track and at least make them, if not serious, then punctual for GST.
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Since the market in India is expanding, the domestic businesses have involved foreign companies and MNCs as well. Now, there is a provision of claiming the tax paid on inputs under GST regime. Lately, the people were not quite happy with how the process tends to function and how it actually does. The input tax credit becomes a very important aspect when there is a refund of the money involved. Somewhere the companies’ budget also revolves around the timely approval and collection of the claimed amount. And since for a long time the council has not been able to apply a flawless solution to make GST rules less complicated, the people have started to not file returns.
If you are a registered taxpayer under GST then you might remember the initial months of GST rollout and the spine-chilling fear that attracted everyone’s attention. The fear was of the non-allowance of the government that would restrict the taxpayer in the future from filing returns if in case he did not file the current return. As the time passed and the people became more compatible with GST rules, they came to know that with a mere fine of few thousands they can file late returns. Although, the majority of the people understand the fact that the late filing attaches a bad history with your taxation document. And the transparent taxation process of GST where anyone can dig in to retrieve information would not let the defaulters reach their prime in doing business.
The rate effect
Over the course of a day, GST creates an impact on every person’s life accountable for the taxation. From cinema to food, everything attracts GST. And since most of the people think that GST rates have jumbled their understanding of the tax on products, the return filer’s rate has decreased. Moreover, the government keeping the daily-use products under 5% tax rate has successfully fulfilled the common wants of the nation but overlooked the effect it created on the revenue collection. The government has been putting a lot of thoughts in the process of reducing the tax slabs and develop an observable contrast.
Even though the government boasted that the regime will immensely modify the taxation in India, the development somehow seems dull. As a matter of fact, the government directing the focus to simplify the taxation system could still pick up even from the dirt. The entire potential of the think tanks, if applied on the core issue of GST that is the lack of ease and processing, could boost the economy through this endeavor.