CHENNAI: The interim filing system of GST continues with no invoice matching so we are still in nirvana but there are dark clouds on the horizon,” said Indira Rajaraman, member of the 13th Finance Commission of India, while delivering the sixth Dr Raja J Chelliah memorial lecture on ‘The Evolving GST’ at the Madras School of Economics on Thursday.
The lecture, which was organised jointly by The Southern India Chamber of Commerce and Industry and the Madras School of Economics had Rajaraman say she was “very nervous” about the final system of GST that is to come into force from April 1, 2019 on a trial basis and will be made mandatory from July 1, 2019.
“The final filing system proposed will bring back a lot of the problems of the initial phases of the GST. It will bring back invoice matching through the back door, with the GSTN portal required to auto-populate input tax credits,” she said. “If quarterly filing below `5 crore turnover threshold continues, there will be delays in auto-populating returns across the divide. There is no urgent need to bring in the final system before these matters sort out.”
She highlighted why the auto-populating role for the GSTN portal was problematic.
“It is important to keep in mind that the malfunctioning of the portal in conjunction with invoice matching in the initial design was what robbed the GST of its key property since uncertainty over receipt of input tax credit made businesses continue to price their products inclusive of input taxes. If quarterly filing for those below a turnover threshold of `5 crore will continue to remain in place, there will be problems with counterparties across the threshold divide,” she said.
Rajaraman shed light on the evolution of the tax and spoke of the challenges that were being faced by businesses in complying with the norms from the time of its inception. “All rate differences within four-digit categories need to be done away with, whether by type of product, type of use or price of the product,” she said. C Rangarajan, former chairman of the Economic Advisory Council to the Prime Minister was also present at the event.