Proposed Return Filing Mechanism in GST not a Business Friendly Measure
The Business process report provides at the outset that
“GST is a self-assessed destination based taxation system.”
In the Working Paper of GST Reforms and Intergovernmental Considerations in India published by the Department of Economic Affairs, Ministry of Finance, Government of India the objective of tax
reforms was stated as follows:
“Another important objective of tax reform is simplification of tax administration and compliance, which is dependent on three factors. The first determining factor for simplicity is the tax design itself. Generally, the more rational and neutral the tax design, the simpler it would be to administer and encourage compliance.”
It further goes onto provide that
“The tax return for such a system can be as short as the size of a postcard. It would simplify enforcement, and encourage voluntary compliance.”
ii) In the Comments of the Department of Revenue to the First Draft of GST in India it was provided in reply to the point No. 11 as follows:
The problem of dual control is better addressed through a compounding scheme as well as administrative simplification for small dealers through measures such as:
iii) Simplified return format
iv) Longer frequency for return filing
v) Electronic Return filing through certified service centres / CAs etc.
The processes being provided for filing of returns form are a clean break from the above practices suggested. They are neither simple, nor easy to understand.
On the basis of what I have gone through, what I can say is present GST Structure is no self-assessment as government is asking for all the details in such extended and detailed form that it shows that they want a check on each and every minutest of things.
Self–Assessment propagates confidence in each other and belief that the other one is doing his part of duty just as the same is being followed in the Income Tax Structure where simplified returns forms are in place with reasonable level of compliance. Confidence is not shown when one puts a detailed check of every activity which is not inherent or system built but for which a separate compliance has to be made by everyone. GST in its present structure poses requirement for separate compliance by the dealer at every point and which would result in taxpayer being forced to expend substantial time as well money in the namesake of compliance.
Simple Law, Simple Compliance with built in checks was what was required and what we have come up is such a detailed and exaggerated compliance law which would not serve as a business friendly measure but as a hindrance in present form unless until modified in a better manner. I would again reiterate that compliance was also suggested in the report of 13th Finance Commission which emphasized on simple and easy law. Its further befitting to see that all the entire previous publication which were released by government be it the 13th Finance Commission Report, Working Paper of GST Reforms and Intergovernmental Considerations in India published by the Department of Economic Affairs, Ministry of Finance, Government of India, Working papers of NIPFP etc spoke of simple compliance norms but out of nowhere comes the present structure.