- Issuance of circulars to resolve pending issues pertaining to mismatch of input tax credit (ITC) as per GSTR-3B vs GSTR-2A/2B. It has now been clarified that in case of mismatch in ITC between GSTR-3B and GSTR-2A, ITC will be allowed to taxpayers based on self-certificate/CA certificate sufficing that tax has been paid to the Government on invoices not appearing in GSTR-2A/2B.
- Clarification regarding taxability of various services under GST like corporate guarantee, treatment of vouchers, liquidated damages etc.
- Details of outward supplies made by taxpayers are now auto-populated in GSTR-1 (on GST portal) basis e-invoices generated by taxpayers. This has aided the compliance process as earlier taxpayers had to manually enter all details on GSTR-1.
- Intra-head and inter-head transfer of amount available in electronic cash ledger using Form GST PMT-09. This helps taxpayers to manage cash flow as now taxpayers can transfer any amount of tax, interest, penalty and fee under one head to another head.
- Adherence of timeline for issuance of refund within 60 days by the tax authorities
- Integration of GST common portal with ICEGATE portal
- Introduction of E-payment platform on ICEGATE which enables user to create a virtual account on ICEGATE website and act as mode of payment to pay Customs duties online apart from the current mode of payments which are Internet Banking and NEFT/RTGS
Clear purpose, minimal administrative burden, fair and transparent approach are considered hallmarks of an efficient tax system. Keeping up with the motive of reducing operational complexities and enhancing trade efficiency, it would be good to see the Union Budget’s focus on easing indirect tax compliance through simplified GST processes, digitized Customs systems and rationalized tariff structures.
Though measures to resolve compliance related issues have been taken and clearly the administrators are listening to address challenges, taxpayers still face issues in day-to-day compliances. Government should consider appropriate changes to overcome the following issues faced by taxpayers:
- Parallel/multiple investigations by tax authorities/investigation agencies – taxpayers face challenges in handling multiple investigations/audit proceedings for multiple GST registrations pan-India.
- Tax authorities demand physical meetings with senior officials of entities (like Directors and CFOs) for the purpose of Aadhar authentication and physical verification of premises during registration process.
- For processing of refund applications, a circular is already issued clarifying that either Foreign Inward Remittance Certificate (FIRC) or Electronic Bank Remittance Certificate (E-BRC) can be submitted to suffice receipt of payment in foreign exchange. However, practically, in few states tax authorities deny refund based on FIRCs and demand E-BRCs for processing of refunds.
- Frivolous notices are issued to taxpayers which pose challenges as they hamper the compliance workflow of taxpayers. Some issues observed in such notices include: 1) Values of turnover and tax amount auto-picked in system driven notices do not match with actual values as reported in GST returns; 2) Tax authorities demand reversal of ITC on account of credit notes appearing in GSTR-2B even though taxpayers have not claimed ITC against the original invoice for which credit note has been issued.
- Although GST common portal has been integrated with ICEGATE, however details of bills of entry are still not accurately transferred from ICEGATE to GST portal due to which such bills of entry do not reflect in GSTR-2B. If bills of entry do not reflect in GSTR-2B, taxpayers cannot claim ITC of tax paid on such bills of entry.
- The special valuation process in Customs takes extremely long to conclude with some cases extending for over 5 -7 years. This poses burden on taxpayers as they are required to submit provisional duty bonds for clearance of goods.
Under GST, government should consider centralized audit/investigation for large taxpayers having pan-India presence and multiple GST registrations. This will eliminate the requirement of multiple audits for each registration separately, ensure uniform tax positions with respect to entity as a whole and save time leading to significant ease of doing business.
Other measures which can be taken to simplify registration process are allowing virtual visits for on-site premises verification, operationalizing the addressal of registration-related grievances in a time-bound manner, providing an opportunity to be heard before rejection of registration application.From a digitization perspective, standard processes under Customs such as ICEGATE registration and compliances have been successfully automated. Areas such as special valuation, advance ruling etc. should also be taken up for digitization on priority. Further, enabling the process of adjudication and litigation under customs through virtual mode and relying on digital submissions and communication will assist in ease for taxpayers.By easing the compliance burden, the government will encourage industries facilitating integration with global value add chains. Ease of doing business in India, could also attract investments by global players when they compare investment destinations. Complicated compliance and litigation systems can sometimes act as a deterrent and it is important for India to be recognised as a country supporting its businesses while maintaining checks and balances.
The author is Partner, Deloitte India
