GST Council set to revamp returns filing process, ease compliance

TAX PLAN Multiple tax returns requirement may be removed, only monthly summary return may remain

NEW DELHI: Federal indirect tax body Goods and Services Tax (GST) Council is set to revamp the return filing process and further liberalise rules to make compliance easier for taxpayers and boost government revenues.

A meeting of central and state government officials in the capital on February 27 will give final shape to the proposal before the council takes it up on March 1 for approval, a person familiar with the development said on condition of anonymity. The 26th meeting of the council will be held through a video conference.

The council is expected to take measures that will make compliance easier for small businesses and traders, which account for the majority of taxpayers, based on recommendations from a panel led by M Vinod Kumar, GST chief commissioner for Karnataka.

It is also expected to do away with the requirement of filing tax returns relating to purchases and a comprehensive return on all transactions. It will instead, retain only the summary return to be filed every month (GST return 3 B), the information on which will be complemented by invoices of sales uploaded. That would be sufficient to give the benefit of tax credit to buyers, whose transactions will be reflected in the sellers’ returns.

Small and medium enterprises and traders account for a large number of jobs in India, especially in rural areas, and form a politically significant constituency, which the government does not want to antagonize when polls in eight states are scheduled for later this year and national polls early next year.

According to data available with the ministry of micro, small and medium enterprises, there are as many as 36 million such enterprises in the country, half of them in rural areas, employing over 80 million people and accounting for a third of manufacturing output.

Businesses will be given a transition period of about six to seven months to migrate to the new return filing system, said the official cited earlier.

Another proposal before the GST Council is to have separate deadlines for small and medium enterprises, or SMES, and large businesses. With the current deadline of the 20th of every month for filing returns and paying taxes for sales in the previous month, the government is facing a delay of more than a fortnight in getting tax payments. The idea is to let large businesses pay taxes by the 7th or 8th every month and let SMES continue with the current deadline.

“This will enable early realization of tax revenue and reduce the load on the IT system,” a second person privy to the council’s discussions said on condition of anonymity.

The federal body is also exploring whether large businesses could be asked to file taxes for sales in March by the end of the month so that the government could account for that revenue in the 2017-18 fiscal year itself. The council will also consider other changes of a technical nature.

“It is now essential to focus on stabilising GST by moving to simpler compliance processes and fewer ongoing changes,” said M S Mani, a partner at Deloitte India.

It is also necessary for the council to announce a uniform date for the e-way bill, which is presently on hold, initially on inter-state movements and on movements within states thereafter, Mani said.

The electronic permit for goods movement under GST should preferably have a higher threshold than the prescribed value of ₹50,000, he added.