Arun Jaitley and India Inc Meet to Discuss Decrease in GST Collections and Compliance

Union minister Arun Jaitley met a representation from traders and exporters to take the feedback on the issues that they are facing under the new Goods & Service Tax – GST Compliance. Issues such as accessibility, implementation, portal availability and timely refunds along with revision of GST rates were discussed in the meeting. Representatives from KPMG, CII, FICICI, Gems and Jewellery Export Promotion Council, Laghu Udyog Bharati, GST service providers, ICSI, Institute of Chartered Accountants of India (ICAI) and Amazon were also present.

All the bodies welcomed the new tax system but asked the government to quickly address the implementation issues.

“The Minister held a meeting with associations representing traders and exporters. The agenda was to take their feedback on issues arising from GST implementation,” Finance Ministry official said.

“He invited suggestions to improve GST implementation systems to ensure compliance burden doesn’t have adverse effects on stakeholders, especially the Micro, Small and Medium Enterprises,” ministry said in a tweet.

— Ministry of Finance (@FinMinIndia) September 28, 2017

— Ministry of Finance (@FinMinIndia) September 28, 2017

Industry bodies like FIEO, Assocham asked for pre-GST benefits & quicker refunds

Federation of Indian Export Organizations (FIEO) has asked the government to provide exemption from GST for merchant exporters and facilitate immediate refunds as working capital of exporters has got impacted by GST and they are now borrowing money to manage working capital.

 “The Minister has taken on board all our points,” said Ganesh Gupta, President, Federation of Indian Export Organizations (FIEO), adding that small exporters have been particularly impacted by GST.

Assocham said that the companies should have the same benefits they had received in the pre-GST era and there is a need for easier compliance including a single return form.

“Filing of GST return has become nightmare for taxpayers. Returns filing for at least six months should be deferred though taxpayers can continue to pay tax,” said JK Mittal of Assocham.

GST glitches pulls down the tax compliance in August?

Since the time GST has been opened up for the businesses to start filing their returns along with credit claims for tax already paid, it has been quite a roller coaster for everyone. Businesses and various organizations representing the traders have come out openly accusing the government for poor GST portal that is full of technical issues making it either inaccessible or returns and invoices not getting uploaded.

This seems to be true in the August month GST collections which have come down by 3.4%.

Government has released the data on August month GST collections

INR 90,669 Cr. was collected by the government in form of GST for the month of August 2017, a ted lower than the July collections at INR 94,063 Cr. However, it is important to note that for July, collections were considered till 29^th August and for August, collections were considered till 25^th September thereby suggesting that it was flat growth.

In August, GST collected by the central & state governments constitute of INR 14,402 Cr. as Central government’s share (CGST), states’ share of INR 21,067 Cr. (SGST) and integrated taxes (IGST) for interstate business and imports of INR 47,377 Cr.

Imports out of IGST were at INR 23,180 Cr.

Worrying Facts

• The GST compliance has gone down. In previous month, 64% assesses paid tax on time whereas in August it has come down to 55%.
• Just about more than half of the 6.8 million assesses (who had to pay taxes and file returns) have done so on time. (as of 25^th September)
• There is a lot inconsistency in the data as the businesses are not able to take the transactional credit particularly exporters not able to claim refunds.

The government should go to the root cause and analyze whether these assesses are facing some genuine problems or they have been migrated automatically and are not required to comply,” said Abhishek Rastogi of Khaitan & Co.

Whatever maybe the case, either it is a failure of the part of government to ensure that traders are not finding any difficulties in uploading their returns and invoices or in all senses, the economy is going down and therefore lesser tax collections.

In the meanwhile, PM Narendra Modi has requested all the states to ‘handhold’ the traders especially the smaller ones on GST issues and help them in full compliance. Also government is working in parallel to get the issues resolved around GST Network and industry specific issues through an expert group led by Hasmukh Adhia, Revenue Secretary.