Transition issues worry businesses
By J Deepthi Nandan Reddy | Express News Service | Published: 20th June 2017 01:30 AM |
HYDERABAD: Though extension of deadline by about two months for filing returns under the GST is being ushered in as a welcome move by the industry, many are urging government to go easy on implementing the new tax regime for the first year, stating that GST is set to bring out a complete change in the indirect taxation system.
GST will replace Central Excise Duty, Additional Duties of Excise on several goods, Service Tax and others levied by Centre and VAT, Central Sales Tax, Entertainment Tax and others levied by states, thus decreasing the number of taxes considerably.
However, the new tax regime will bring in a complete change in rules and procedures that are to be followed for filing tax returns, refunds and penalties to be incurred, which is leading to rising fear among businesses, be they big or small.
“The two months extention for filing returns is very useful for businesses, especially micro and small, which are not yet ready for GST and do not have qualified manpower and access to IT infrastructure. One needs to keep in mind that GST needs a complete new system for successful implementation. The government, tax officials, small and big businesses all have to be prepared, if GST needs to be implemented effectively. The government should go easy on businesses regarding compliance for the first year as more time is needed for the businesses to get accustomed,” said Ravindra Modi, president of FTAPCCI.
GST will be applicable on supply of goods or services as against the present concept of tax on the manufacture of goods, sale of goods or on provision of services. It will be based on the principle of destination based consumption taxation as against the present principle of origin based taxation.
Further it would be a dual GST with the Centre and the States simultaneously levying it on a common base. The government is set to completely transform the indirect taxation regime, thus pushing the envelope for all the stakeholders.
“Under GST, work burden is set to increase on businesses in case of filing tax returns. Every transaction— both B2C and B2B— needs to be tracked. People also need to be trained to help them adapt to new system.
While work burden will increase, there are apprehensions over penalties. Tax arrears are to be recovered using various modes including detaining, sale of goods, movable and immovable property of defaulting person, stated DS Rawat, Secretary General of Associated Chambers of Commerce and Industry, adding that the government should give businsses more time and go easy till they get adapted to the new system.
Under GST, the Input Tax Credit is to be broad based — making it available for taxes paid on any supply of goods or services or both, used or intended to be used in the course or furtherance of business.