Goods and Service Tax (GST) is structured for efficient tax collection, reduction in corruption, easy inter-state movement of goods and a lot more. But after implementation of GST the general public is facing problems in compliance procedures of GST from the very first month of return filing. Over complicated forms, a non responsive portal, confused drafting, huge data compilation etc resulted in overall dissatisfaction among businessmen, tax practitioners alike. In this article, I am suggesting few changes, which may make compliance more easy and affordable for taxpayers.
- Registration Requirement:
- At present the government mandates separate registration and filing of forms in each state in which a business has a presence. Centralizing registration and creating a single form for service providers, such as banks, insurers, and airlines, that have a presence in multiple states could simplify the filing process, reduce paperwork, and ensure better GST compliance — all of which were the primary objectives for the new tax system.
- Currently the threshold limit for obtaining compulsory registration is Rs 20 Lakhs, which is low considering the increase in inflation and per capita income of citizens, the same need to be increased to at least 25 Lakhs for Services providers and 50 Lakhs for Traders & Manufacturers. It will provide relief to many small scale businesses who are trapped in the compliance cycle every month.
- Composition Scheme for Service Providers:
- It is worth noting that the composition scheme does not apply to restaurants that don’t serve alcohol, as these restaurants pay tax at 5 percent of turnover. Making the composition scheme applicable to small service providers as well would boost GST compliance and subsequently reduce the cost of eating out for the general masses.
- It has been observed that tax rate of 18% is applicable to most of the services under GST law, many customers are unwilling to pay such huge amount, due to which many small service providers are not able to retain the clients. This additional burden of Tax can either be reduced by lowering the tax rates for services or by giving an option to opt for composition scheme. Optimal Tax Rate under composition scheme should be 5% on bill value and threshold limit should be 50 Lakhs.
- Reduce the frequency of Return:
- The frequency of return filing should be reduced to “single return per quarter” but tax should be collected monthly so that burden of tax payment can be reduced. A Single Return Per Quarter will give a breather to Tax payers as well as to Tax Consultants.
- At this time, the government has temporarily suspended the requirement to file forms GSTR-2 and GSTR-3. For now, GSTR-1 will be the de facto form for taxable supplies. It can be simplified by consolidating GSTR-1, GSTR-2, and GSTR-3 into a single form, with form GSTR-8 as a subset of this fused form.
- Do away with RCM concept:
- One of the most draconian provisions under GST law is taxability of goods & services on Reverse charge basis. It leads to unnecessary confusion in the mind of taxpayers, one has to pay taxes upfront and after that one can avail ITC of the same. It is creating chaos in compliance as well as in maintaining accounts. If government repels these provisions it will provide a huge relief to tax payers.
- Increase Threshold for audits:
- Current threshold limit for getting accounts audited under is Rs 2 crores, which is very low considering the complexities involved in the audit. Also cost of audit will add to the cost of compliance. Time and effort required will also be huge which may be time consuming. Hence it will be wise to increase the limit to Rs 5 crores.
- Supplier wise Reconciliation of outward Supply:
- Late fees:
- Revision Facility for returns:
- Other suggestions: