Issues & Challenges under GST

BIMTECT
GOPAL C MONDAL
November 22,2018
 BACKGROUND & INTRODUCTION

 Indian Economy & Taxation

 Merging with 17 taxes and 23 cesses
 GST – World Experience
 GST – Marriage of Centre and States & UT
 GST- Ease of doing business
 GST: 1st Anniversary completed on June 30, 2018
 GST Council
 GST –EASE OF DOING BUSINESS

 Single taxable event: “Supply”

 Common: Registration, Return, Payment of tax, Refund
process, Forms, IT System and Rate of tax
 Seamless Input Tax credit (ITC) ???
 Reduction time for return filing from 105 hr. to 36 hr.
 Benefits to SME:
 Composition Scheme
 Registration limit: Aggregate turnover exceed Rs. 20
lakhs.
 GST –EASE OF DOING BUSINESS

 Registration limit: Aggregate turnover exceed Rs. 20

lakhs.
 No GST on advance payment
 Export through Merchant Exporters: GST Refund
 No check post across the States
 Single E-way bill
 GST: 1ST ANNIVERSARY (LAST 15 MONTHS )
• Registered tax payer:
(i) Migrated tax payer – 63.5 Lacs
(ii) Total registered tax payer (including Migrated): 1.14 Cr (Sep 30,
2018)

• Compliances increased from 34% (July 2017) to 70%; non-

compliance so far 30%; why ???

• Tax Collection growth around 14% y-o-y

• Average tax collection per month more than 90,000 Cr.

• E- Way Bill issued so far : 25 Cr. (From April, 1, 2018 to September

30, 2018)
 GST –CHALLENGES
(i) SME Sector – Compliance burden vs technology awareness

(ii) Registration > Rs. 20 lacs

(iii) Lack of awareness for classification of inter-state vs. intra-state supply and
taxes accordingly

(iv) Negative impact on service sector as the tax rate increase from 15% 18 %

(v) Branch transfer and negative impact of working capital

(vi) RCM method: Section 9(3)/9(4)

 GST: AGENDA FOR 2ND YEAR

• Restructuring of present rate of tax : 5%/12%/18%/ 28%

• Simplification for GST Return Format

•
 GST: AGENDA FOR 2ND YEAR

• Export Refund : IGST Refund is smooth but the big challenges for Refund of
ITC

• Advance Ruling: Central authority

 GST: Seamless Input Tax Credit (ITC)

Before July 1, 2017

Manufacturer to whole seller (within UP) GST: July 1, 2017

Basic sale price 100 Supply of Goods/Services 100

Add: GST @ 18% 18
Add: Excise duty @12.5% 13
(CGST + SGST)
Sub-Total 113 Total Sale Consideration 118

Add: VAT @ 14% (14% on 16

Rs.113)

Total Selling Price 129

Tax on Tax (Cascading Effect) 2
14% on Rs.13
 Serious drawback in supply chain of goods or services, in
case of default in payment of tax.

An example: Company A selling goods or services to Company B which then sells to

downstream company C. Assuming tax rate is 20% (CGST + SGST) and the transaction is
within the State. All companies are registered taxable person.

Company Company Company

End Customer
(A) (B) (C)

Supply of 100 Supply of 120 Supply of Goods/Services 150

Goods/Services Goods/Services
Add: GST @ 20% 20 Add: GST @ 20% 24 Add: GST @ 20% 30
(CGST + SGST) (CGST + SGST) (CGST + SGST)

Total Sale Consideration 144 Total Sale Consideration 180

Total Sale 120
Consideration
Payable to Tax Department 6
Payable to Tax 4
Payable to Tax 20 (30-24)
Department (24-20)
Department
Essential requirements for availing ITC under
GST
Requirements for availing Input Tax Credit

(a) possession of a tax invoice, debit note, or such other

taxpaying document as may be prescribed,

(b) Taxable person has received the goods and/or services or

both

(c) The tax charged in respect of such supply has been actually
paid to the Government, either in cash or through utilisation of
input tax credit admissible in respect of the said supply; and

(d) Registered taxable person has furnished the return under

Section 39