A better late than never GST move

online. The GST Network, however, did not have the facility to file this form online. So, taxpayers were not able to claim this credit. On August 8, the government notified August 20 as the last date for filing of the summary statement of outward and inward supplies during July in form GSTR-3B online and to discharge the tax liability. Taxpayers faced the prospect of having to pay the tax on the basis of a summary statement of outward and inward supplies in form GSTR-3B alone. This form gives no facility to take into consideration the credit carried over from the earlier regime. So, the tax liability had to be determined only on the basis of summary of outward and inward supplies made during July and reported in form GSTR-3B.

This created a situation where taxpayers had to suddenly find extra cash to discharge the liability determined without taking into account the input tax credit they were entitled to carry over from the earlier regime. In other words, although they had huge credit balances, they could not utilise these. They were faced with a sudden demand for cash to discharge a tax liability that could be met only from working capital. This threatened to deplete the working capital for carrying on day-to-day work, which could have been quite disruptive.

The latest notification, 23/2017-Central Tax, dated August 17, relieves them of this unexpected burden. However, exporters, who were promised refunds within seven days of tax payment, will have to wait longer. For export made in July, they now have to pay the tax by August 20 and report in form GSTR-3B. But, they cannot get refunds unless they file the GSTR-1 and GSTR-2 returns next month. It is after GST Network tallies invoice details withe shipping bills that the refund claims can be processed. So, the refund could be delayed by over a month.

This means unexpected blockage of working capital. As it is, exporters are reeling under the demand to pay GST on their import under advance authorisations, EPCG authorisations and duty credit scrips. They also have to pay GST on all domestic procurements of inputs and input services. Their working capital, already depleted, will get reduced even more.

The government was aware of these problems and was expected to issue notifications extending the deadlines and allowing carryover of the credit well in time before the tax is required to be paid. Anyway, after causing enough anxieties, the government has done the right thing.