Challenges in The Current GST Structur e

The Goods and Service Tax (GST) system or the revolutionary tax system after a decade of intense debate
came to fruition and existence few years ago. GST was introduced to the country to reduce the tax burden on
producers and foster growth through more production. Though the tax structure has tried to solve major issues
relating to the taxing in India, the reform has many challenges. The government on several occasions, has given
clarifications to reduce ambiguities and make the process smooth and easy.

Mentioned below are few of the challenges of the GST.

Reporting of HSN

Harmonized System of Nomenclature (HSN) is an internationally accepted coding system. In filing monthly GSTR
3B, the detail w.r.t. to the HSN of the inward supplies was not required, however, the HSN wise detail is required
in the annual Return GSTR 9. Reporting of HSN code increases the time and effort for monthly or quarterly
compliance. Overall in the longer term, not aligning the system of business with the GST regime could have
multifold impact on the business.

Numerous offences and penalties under GST

There are numerous penalties and offences under GST, principles of which are also mentioned by law. For
example, not registering under GST, even though required by law is an offence. There are many other offences
and penalties, which can hinder its popularity in India. The general penalty under GST for any offence for which it
is not specifically mentioned will be liable to a penalty extending INR. 25,000/-. A person can be arrested for
certain GST related offence by authorized CGST or SGST officer.

Reconciliation in GST

The Reconciliation process in GST is not new to any taxpayer as this was a common practice in earlier VAT and
excise regime. After reconciliation a taxpayer needs to match the data between the books of accounts to
complete the process.

In the GST regime, the process of reconciliation is a challenge. The invoice number that the purchaser has
recorded does not match with seller’s invoice received in 2A. Both follow a different principle. One of the major
challenges in following a reconciliation process is that both parties involved may have different nomenclature of
storing the invoice numbers. On the other hand, the implementation has a hard match around invoice number.

Refunds are time taking in GST regime

It was assured that 90 per cent of the refunds of GST would happen in seven days at the time of GST
implementation. But on the longer term, it did not happen. The recent unearthing of fake invoices and fraudulent
practices to corner input tax credit may only lead to more scrutiny and more delays. This results in human
interfaces, which may lead to the involvement of corruption.

Several items to be brought under the ambit of GST

There are certain items, which do not come under the ambit of GST. It is applicable on items such as petroleum
products and electricity should be brought under the GST to boost the manufacturing sector. At present, there is
no official data available to show the present GST tax collections vice-versa the revenue being collected by 17
taxes such as VAT, Octroi tax, service tax and luxury tax, which got subsumed once the GST was rolled out.

Lack of an efficient Helpline

Filling GST can be a great challenge as there is no helpline number, which can make this job hassle-free. Rules
are complex and compliance is tedious. Even tax experts sometimes fail to understand what needs to be done in
a particular situation. In this situation, a typical tax payer cannot understand the nuances of GST. There is no
efficient government helpline where a taxpayer can call and discuss his queries.

Several market players are offering solutions to deal with the challenges related to GST in different ways.
Accounting Software

There is a wide range of accounting software available in the market to help the taxpayers while filing GST
returns. It makes the work easier and simpler. Such software are exclusively designed with algorithms that
identify errors on each step of the GST filing process to make it hassle-free.

Government Role

The Indian Government is taking certain initiatives to find solutions to the challenges. The present government is
trying its best to simplify and rationalize the GST regime.

In future, the council may consider merging the 12 and 18 per cent slabs into a single one of possibly 15 or 16
per cent, which will also simplify the rate structure.

Revising the GST law

Revising the law, can make the necessary changes and will further ease the process of tax filing by removing the
unnecessary flaws. This will further improve the tax collection rates. In the longer term, the country’s economy
will grow.