"GST Has Entered A Smooth Phase": Hasmukh Adhia, Union Finance Secretary
HASMUKH ADHIA, Union Finance Secretary
It is a year since the rollout of the Goods and Services Tax (GST). After initial glitches, the industry and businesses seem to have come to grips with the progressive tax system. There are, of course, some issues with the GST, which the government and the GST Council, the supreme, decision-making authority of the indirect tax regime, are addressing.
The GST has entered a "smooth phase" within a year of its rollout. With "pretty good" tax compliance, the efforts will now be to simplify tax return forms, discloses Union Finance Secretary Hasmukh Adhia. Mr Adhia views are taken seriously because he has been one of the leading bureaucrats to oversee the NDA government's two major initiatives - demonetisation and GST. A blue-eyed boy of Prime Minister Narendra Modi, the 59-year-old IAS officer of the Gujarat cadre had spearheaded the remonetisation drive quite efficiently. Mr Adhia was one of the top executives who had worked behind the scenes in getting the long-stalled GST to become a reality in July last year.
Born in Wankaner in Gujarat's Rajkot district, Mr Adhia had done his MCom from Gujarat University, followed by a diploma in public policy and management from IIM-Bangalore. He also has a PhD in Yoga from Swami Vivekananda Yoga University in Bengaluru. Mr Adhia was principal secretary to Mr Modi, when he was the chief minister of Gujarat. Later, the top bureaucrat was moved to New Delhi - when Mr Modi became the prime minister in 2014 - and was appointed Union financial services secretary. In a wide-ranging interview, Mr Adhia, one of the top bureaucrats who put GST into operation, throws light on the new developments taking place in the indirect tax regime. A year later, what are the major gains that the GST has brought about?
There are quite a few gains. The GST has resulted in reduction of multiple taxes, removal of cascading effect of taxation, removal of State check- posts, end- to- end electronic filing, expansion of the taxpayer base and lesser possibility of tax evasion.
Would you say that initial pains associated with implementation of the GST is over?
Of course, yes. For any new system, there will always be initial glitches. I don't think that we can use the word pain, and these glitches are also mainly on account of a lack of information. So, the moment the information gap was removed, people felt more comfortable. I think all the glitches are over, and we are in a smooth phase of implementation.
What is the unfinished agenda of the first year of GST?
This year's main agenda will be to implement a new and simple system of filing of returns.
The design for simplified return form has been approved by the GST Council in May. Would you elaborate on how the form would be?
The one-page return will be modular in nature. So, if you are a B2C (business-to-consumer) dealer, then many of the sections will not open at all for you. If you are a B2C dealer, then only one form will open, and it will have a small table. It will be user friendly. The same return will have two sections. One will be on your tax liability and input tax credit (ITC) that is being claimed. The second section is for B2B (business-to-business) dealers who have to file invoice-wise details in a tabular form. B2C dealers have to file only ITC claims and pay taxes.
Critics of the GST note that formalisation of economy has not been achieved the way it was intended to.
In fact, data on GST contradicts what critics of the new tax are saying.
"During the pre-GST period, there were about 60 to 65 lakh people who migrated
to the new tax system, and the remaining (48 lakh)
are all new registrants. So, these many new dealers have come into the
tax net. If it is not formalisation, then
what is it?"
During the pre-GST period, there were about 60 to 65 lakh people who migrated to the new tax system, and the remaining (48 lakh) are all new registrants. So, these many new dealers have come into the tax net, and percentage-wise, the figure is quite high. If it is not formalisation, then what is it?
But then compliance is not getting reflected in monthly returns filed.
Compliance is pretty good. There is only a delay in compliance. For July 2017, out of the people who were supposed to file 3B, 93.63 per cent have already filed over a period of time. But if you take March 2018, 79 per cent had filed 3B returns. Compliance in August was 94 per cent, September 92 per cent, October 89 per cent, November 86 per cent, December 85 per cent, January 83 per cent and February 81 per cent. You can see that the compliance level keeps on increasing with a time lag. Over a period of time, the compliance level will go up to 96 per cent and above. Moreover, there is no penalty or very little penalty today as about 25 per cent of return filers have zero transaction.
"This year's main agenda will be to implement a new and simple system of filing of returns. The one-page return
will be modular in nature."
With contradictory verdicts passed by the Authority for Advance Rulings (AAR) in different States, what is the way forward?
This is under discussion in various committees of officers. Advance ruling applies in individual cases. It does not apply to all. And in a particular circumstance, it applies to a particular case. But it may so happen that one party itself having multiple State operations can go to different States and get different verdicts. So, for that, one way out could be to have a centralised appellate authority rather than a centralised advance ruling authority. There can be an appellate authority on top of the advance ruling authority. So, if there are two differing viewpoints given by two different AARs in two different States in respect of the same circumstances, then it can come to the appellate authority. This is under discussion. We will see if it is to be done. Once the GST Council decides, we will make it a part of the legislative amendments.
What are the amendments to the GST law that are on the anvil?
These amendments have already been approved in the January meeting of the GST Council. Broadly, the amendments are for taxpayer facilitation and for removing difficulties and glitches in filing returns. Small problems in drafting that have been identified will be removed, and this will help taxpayers.
Has the Centre made any concrete proposal to the GST Council to bring petrol and diesel under the GST?
We are conscious of the fact that there are certain petroleum items which are not a part of the GST. As and when there is a discussion on these items in the GST Council, the council will take a call on it.
Will the GST Council start discussion on petro-products, beginning with natural gas, which is seen as a low-hanging fruit?
It depends on what the GST Council wants to discuss. But yes, among the five items, the two natural candidates for the first level of discussion would be natural gas and aviation turbine fuel. The GST Council can decide what it wants to discuss, but these two are easier.
How soon do we see the process of converting the GST Network (GSTN) into a public company getting complete?
We will take it to the Cabinet soon. It will happen this year. The GSTN chairman will continue. As far as staff arrangement is concerned, the present dispensation will continue for five years.