Past, Present, and Future Scenario of GST Regime

Some expectations are yet left to be fulfilled, some issues are yet left to be settled down! Some pending petitions, some harsh provisions and some new steps in the digital world are halting our journey towards full stabilization and uniformity under GST.

GST system is the biggest reform in the taxation system which rolled out with a motto of “One Nation One Tax”. This system has been adopted by a few developed countries and its implementation in India is itself a remarkable measure to bring uniformity in the taxation system.
The inauguration of the GST regime brought many complications for the taxpayers and traders because they were not on board with this new system neither they were fully conversant with the procedures and acts under GST.

With the passage of time, amendments in law and 35th GST Council Meetings, some charities and stabilisation were yielded and some are yet left to achieve. Some of the issues are ironed out, some are on the verge of resolvement and some needs to be sorted at the earliest. Here we have spelt out the past, present and future scenario of GST era.

GST Return Filing

Initially, the filing of GST returns was troublesome and baffling for the taxpayer but some stability can be now be seen. However, the implementation of the new proposed return filing system should be postponed until the time comes when the businessmen, professionals and the departmental authorities become well-acquainted with the same. Change in the return filing process in between the financial year becomes inconvenient as accounting systems need to be altered to get attuned with the same.

GST Refund

Initially, the defiance (absence) of GST refund created havoc in the minds of the exporter and stagnated their working capital. Now direct refunding to the exporter of goods and 90% instant refund to the exporter of services marks the smooth and up-to-date refund process. But the recent notification about verification of all refund claims by the authorities has again accosted a tense atmosphere for the exporters.

Introduction of Cess

Initiation of Kerala Calamity Cess has become a matter of concern as people of other states are dreadful that they may also have to pay cess introduced by the state for some other welfare schemes.

Notices for Reconciliation

Periodic notices for variations in Input Tax credit claimed by the trader and as reflecting in the GSTN network before the completion of a year puts traders and industry cumbersome situation. Business and professionals get more bewildered when they get to encounter the difference between figures reflecting in their GST Return, GSTR 2A on GSTN network and figures specified in the government notice.

A Call for Centralised Assessment

Business operating from different places/locations are facing complications in appearing for assessment before authorities in different states. Usually, large organizations follow a centralised system of accountancy and taxation. So, an awaiting demand of the trader with locations in multiple states for assessment or inquiries in the main state would be a worth appreciating step.

E-Invoicing for Business

Initiation of e-invoicing is a digital move in the digital era but it has summed up the compilation of GST because of the absence of clarity regarding the process of its generation in the situation of system breakdowns.

Fitful Changes

The traders and professionals are combating with the fitful and frequent changes and notifications issued since the beginning of the GST regime before two years. Although the alterations and amendments are needed for clarity, major amendments affect the decision taking potential of the industry. Real Estate sector is an apparent example that showcases how the imposition of conditions for a new scheme and old scheme of taxes on builders and developers have brought them into a quandary to opt between the schemes and how they are affected by a loss of past and future ITC.

Cross charging of expenses between offices in different states
A bothersome situation and court intervention are anticipated in the absence of any precise guidelines for cross charging of expenses between offices in various states. The latest ruling in the case of Columbia Hospitals which cross charged the employees cost of head office has raged the matter further. Appropriate clarity is highly needed ASAP.

Writ Petitions

There are many orders laying pending before the High Courts. Initially, the issues regarding the system, transitional credit and so on were enlisted as the writ petitions questioning the sections and procedures. Now the issues like allowing ITC on the construction of malls, Detention of goods, RCM on Import Ocean Freight, Interest on Gross Liability and not after the ITC adjustment, Liability on Mineral Rights Rate on Solar Equipments, etc are also writ petition which needs to be resolved ASAP.

Input Tax Credit

ITC eligibility has been a matter of argument between trade and authorities from the pre-GST era. In the present scenario, if a vendor does not pay GST or file returns, he/she becomes ineligible to claim ITC, this provision is tough and so should be revised at the earliest.

Imprisonment under GST Regime

Different stances by different High Courts and bail approval for illegal acts under GST has led to the formulation of the special bench under the Supreme Court to resolve the issue to avert the conditions of uncertainty in such cases.

After two years of GST regime, a balanced scenario with smooth GSTN network and minimum changes in the law is something we expect but it is quite apparent that we are straddling the fence and there is much left to be achieved for authorities and businesses. Meanwhile, the emphasis should be on broadening the tax base, curbing the tax evasion and simplifying the procedures and GSTN system.

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