Revenue secretary Hasmukh Adhia has worked closely on the implementation of goods and service tax, which he says will deliver results in the long run. In a chat with Sidhartha, he talks about possible changes to address concerns and says some of the noise is due to reluctance to pay taxes.

Excerpts:

There are concerns over the way GST has been implemented. How do you respond to it?
This is a long-term structural measure, which will yield benefits over a period of time but the transition pain is immediate and short-term. It was a reform that was coveted by the country , including by businesses and economists, for the last 10 years. The shortterm transition pain will have to be absorbed by all of us.

There will be pain because the rules are different and the IT systems are different. Even before GST, in most states, VAT filing was online and nine states had the requirement to match invoices, which has now been adopted for GST.But as long as the government is willing to listen, as long as the GST Council is flexible and comes out with solutions in every meeting, it is good news for everybody.

There is also criticism of frequent changes in the rules.
Is it bad to respond to difficulties being faced and make suitable changes? It’s better to be flexible and give immediate relief to people. For honest taxpayers, there cannot be anything better than this because GST puts a premium on honesty. At the same time, it will make it very difficult for dishonest businessmen to evade taxes and that’s why there is some opposition. Those who were not paying taxes will face some pain initially because for the first time, they have to put everything on record, maintain proper books of accounts and file returns.

There is a perception that SMEs are suffering because larger players are not sourcing from them.How do you address that?
I don’t think that will happen. What we have said is that for a registered dealer to take credit for purchases from unregistered dealers, he has to pay tax on reverse charge.But that does not have to be paid in every transaction, it’s an adjustment that will be made in the monthly returns.There is no physical payment or refund. We are aware of the concerns of SMEs undertaking B2B transactions and the GST Council will take appropriate steps to address their concerns. We are trying to look at steps to alleviate the compliance burden of SMEs.

There are repeated concerns about GST Network, from bunching towards the deadline to the system collapsing. How do you propose to address that?
GSTN is constantly improving. The problem is not with the server capacity . Currently , it is not allowing more than a certain number of transactions at a time, which is to ensure safety and security. We will not compromise on security of the system but GSTN is looking at the issues and if it is possible, it will allow more returns to be filed on the last day too. We will also try to come out with a time table to allow filing of returns to be staggered, instead of the same deadline for everyone. We have already started with it from October by allowing big companies to file earlier.

Exporters say that Rs 65,000 crore is blocked.What are you doing to address their concerns?
That estimate is incorrect. For three months (up to September), we had allowed duty drawback. So, there is no impact on 66% exporters who avail drawback based on their exports. For the rest, who opted for refunds, there was always a blockage of three-five months. The Council will address the issue of blockage of funds due to payment of taxes on inputs and various options are being looked at. Fast-track ing of refunds will be done for everyone so that refunds are paid after matching of GSTR1 and GSTR 3B (forms).

The government is blamed for extracting too much tax from petrol and diesel and petroleum minister has been pushing for their inclusion under GST. Should that be done and are you ready for it?
It’s not the Centre which is opposed. We need to estimate the revenue that we can expect from these products.In most countries, even if there is VAT or GST, there is always an additional excise duty on petrol and diesel.

Is the noise because people don’t want to pay taxes?
That is not the only reason. There are issues of compliance for small scale industry , which we are going to address. There were several sectors which were earlier exempted and there may be some resistance from some quarters.

 03 Oct 2017, 12:41 PM