Government steps up efforts on GST but job still half done

Ever thought of paying taxes with your credit card? Well, once the proposed Goods and Services Tax (GST) comes into effect all possible payment options, including the use of credit cards, will be available to facilitate indirect tax compliance.

In spite of the uncertainties regarding the enactment of a constitutional amendment bill to facilitate the rollout of GST, the Centre has started shedding some light on the manner in which it would be implemented on ground, where the anytime-anywhere mode of tax payment will be the underlining principle. The payment process will happen electronically and will include online payments, e-challans and electronic reconciliation of receipts.

The finance ministry has put up the draft business process report for GST detailing the registration, tax payment and return filing procedures for companies and businesses. Registration will also be automated and will involve minimal interface with the taxman. Says Anita Rastogi, Partner, Indirect Tax, PricewaterhouseCoopers: "These are welcome measures and would facilitate compliance." The draft also talks about increasing the number of times returns have to be filed. "The proposed process of filing a minimum of three returns in a month would significantly increase the compliance burden for service providers, who are presently filing only one return on a half-yearly basis," says Rastogi.

However, there are a few things in the business process draft that still need to be ironed out. For instance, the proposed returns process, which is quite detailed in nature, emphasises on cross-matching of data submitted by various assesses. While this will put in place a far superior system to verify the contents of the returns filed and reduce possibilities of revenue leakages, its success would depend on the accuracy of the submission of data by all taxpayers in a specified format. "This may be a challenging proposition for tax-payers. Further, the return form does not seem to provide for a separate disclosure of intra-entity transactions," says Rastogi.

The reports were commissioned immediately after the GST Bill - The Constitution (122nd Amendment) Bill, 2014 - was tabled in the Parliament last year. While the Bill was passed in the Lok Sabha, it is yet to be cleared by the Rajya Sabha. And, even if it is passed during the winter session - as the government hopes it would - several hurdles may come in the way of its implementation.

One: After the Bill is passed in both Houses, it would be sent to state assemblies, where it has to be ratified by 50 per cent of state legislatures.

Two: It has to be then enacted both at the Centre and in states. While the central GST and integrated GST (iGST) laws have to be enacted by Parliament, the state GST law will have to be enacted by the state legislatures. The key aspects of GST, including tax rates, tax base, exemption limits and the appropriate iGST model, will also be finalised at this stage.

To be fair, the government has already done a lot of ground work on the CGST, SGST and iGST drafts, which are expected to be available for public comments soon. The reason why the business processes drafts preceded these draft laws is simple. It is just an attempt to show the government's intent, and its desire to fulfil its April 1, 2016 deadline to roll out GST.