Too Much, Too Fast

Frequent changes in GST laws and tax rates are unsettling the new ecosystem, delaying the process.

Frequent changes in GST laws and tax rates are unsettling the new ecosystem, delaying the process

The problems faced in filing returns and uploading documents by those paying Goods and Services Tax ( GST) have forced the government to extend the last date for uploading yet again. Three GST returns ( GSTRs) have to be filed every month, but now GSTR- 1 for July – the month the GST regime began – can be filed up to October 10, instead of September 5 as had been announced before. Accordingly, the GSTR- 2 deadline is now October 3 and that of GSTR-3, November 10.

Rates, too, have been tinkered with again. In the auto sector, for instance, the compensation cess on mid segment cars has been raised by 2 per cent, on large cars by 5 per cent and SUVs by 7 per cent. Changes have also been made in the criteria governing who is liable to pay GST and who isn’t, which categories need to have tax deducted at source, and more.

The Changes

The latest postponement brings some relief to taxpayers, giving them more time. But it also exposes the claims of government departments that the GST structure and GST Network ( GSTN) were ready for immediate implementation. Network and other service providers have complained that the frequent changes have been impacting the working of the GST ecosystem. There is growing confusion among tax consultants and other service providers, such as the GST Suvidha Providers ( GSPs) and Application Software Providers ( ASPs).

But the deadline postponement was inevitable, considering the numerous complaints of taxpayers not being able to log in or upload documents, while others struggle with the concept of digital signatures. “Of the estimated 4.5 million liable to pay GST, only 1.5 million had filed their GSTR- 1 by September 7,” says Navin Kumar, who recently retired as Chairman, GSTN. In all, 110 million invoices had been uploaded at an average of 71 invoices per taxpayer. He says so far 11 crore invoices have been uploaded with an average 71 invoices each taxpayer. “We had calculated that the average number of invoices per taxpayer would be 128,” adds Kumar. “It means the larger players who generate a lot of invoices have not yet filed their returns. It is mostly the smaller firms which have filed.”

Acknowledging minor glitches in the system, he insisted, however, that the GSTN had been regularly fixing them. “If 1.5 million people could file their returns, it means that it is not problems at our end that are deterring the rest from filing,” he says. “Possible reasons could be poor Internet connection at taxpayers’ end or slackness of GSPs and ASPs.”

But even Kumar admits that the frequent changes in the GST framework’s nitty-gritty were slowing down the system. “Typically, a software programme or an application development goes through a cycle and needs time to settle down,” says the CEO of a GSP. “But due to the frequent changes, neither the GSTN, nor the GSPs and ASPs, are getting enough time,” he says.

The GSTN option has also created confusion by giving taxpayers the option to directly file their returns on the GSTN website. “Around 2 million taxpayers will avail the services of a GSP or ASP,” says the GSP CEO mentioned earlier. “Imagine what would happen if all these people went directly to the GSTN website on the last two days. People by habit tend to file returns on the last day, and this puts pressure on the system.” The GSTN system can take a load of 80,000 requests per second. According to Kumar, on September 5, the earlier deadline for filing GSTR- 1, requests per second went beyond capacity. “They were kept waiting. Many taxpayers complained of not being able to file returns on time,” he adds

The GSTN has been blaming the GSPs and ASPs for being slow with updates while the latter complain about GSTNs’ inability to cope with the frequent policy changes, paucity of manpower and even the inability of its leadership to resist frequent changes in the law.

The chaos is likely to continue with the government, too, unable to give a final shape to tax rates and GST rules. As the government struggles to fix issues raised by taxpayers and other stakeholders, the situation is likely to continue. However, given the sweeping nature of the change, optimists are ready to give the government more time to set the GST house in order. ~