NEW DELHI:
The biggest tax reform in India is scheduled to be rolled out in about seven weeks, and while indirect tax experts across the country are offering their services to companies - big and small, yet as the date gets closer, confusion about GST-compliance is turning into panic.

Economictimes.com organised a conference - GST Simplified - in New Delhi on Thursday to address the concerns and given by the attendance and the sheer amount of questions, it is clear that there is a humungous need to simplify government policies, especially for the benefit of more than 51 million SMEs (Small and Medium Enterprises) operating in India.

Sounding a cautionary note, IamSME of India’s Chairman Rajiv Chawla mentioned how all familiar processes of doing business are set for an overhaul with GST, but mentioned that the change is only for the good.

Supporting the sentiment, Outcome Solutions and Services LLP, Partner, Gaurav Shukla assured that even if there is confusion reigning presently, the ease of dealing with one authority instead of multiple centres will be a source of great ease. "This is a huge change in the pattern of taxation and the government is giving positive signs like keeping the rates similar to the existing regime. The streamlining of all the taxes may also result in lower rates in future."

Various sources have revealed that a large chunk of SME business owners have not yet come onboard; and, experts suspect the cost of complying with GST might be a big deterrent.

"This will make it much easier for SME owners to come into the main taxation bracket but the minimum cost required for compliance might come to Rs 1 lakh per annum and any business unable to afford this sum will not be able to become a part of this," remarked Foundation for MSME Clusters, Executive Director, Mukhesh Gulati.

The GST Council, headed by Finance Minister Arun Jaitley, is set to announce the final rates as well the commodities which will fall under GST on May 18 and 19 in Srinagar. It is only then that the taxation experts will be able to plan better.

"While the rates are pretty much decided, the products which will fall under various categories are yet to be announced," said FICCI - CMSME, President, Sanjay Bhatia.

The unpreparedness of the businesses for GST is a big cause for worry and with a substantial number of SMEs without any digital presence or even access to creating one is a major hurdle. Given that there is no provision for filing physical returns under GST, experts insisted that the SME owners must invest in technology.

"There are several cloud-based applications that those companies which do not want to invest in computers can access. However, it is time to invest in technology. People should have basic technology in place because there is no provision for physical compliance and not sure if it is even going to be introduced in future. Besides, it is not just about compliance cost but the buyers can also claim input credit on their purchases," said Shukla.

Not just tax collector but tax inspector, too
"Filing my own tax is not the only issue. In order to claim Input Credits, I shall have to ensure that all my suppliers have also filed their own returns to make sure that my earnings do not get impacted. So, essentially I will be acting not just as a tax collector on behalf of the government but also as an inspector," said Chawla.

Apart from that, the need to register in multiple cities for a pan-city business or service provider is another cause of confusion. "Businesses need to register at the point of delivery and not at the point of origin, that is the change under GST," Chawla pointed out.

With the rates announcement expected next week, some of the confusion is expected to be resolved. However, if the government manages to keep its deadline this time, the business owners will be left with less than seven weeks to understand and register their businesses under the new regime.

"There is no need to panic, though. The government is expected to go easy on compliance in the initial weeks," assured KPMG, Partner and Head - Indirect Taxes, Priyajit Ghosh.

Economictimes.com will be taking its programme - GST Simplified - to multiple cities in the coming days in order to help the business owners understand how they can become part of India’s biggest taxation overhaul.

 13 May 2017, 12:51 PM