GST compliance relief to have minimal effect
NEW DELHI: The Goods and Services Tax (GST) Council has found that there would be little revenue impact in further substantial relaxation in the compliance burden on small taxpayers under a scheme that is being discussed, according to ZZZZ.
The federal indirect tax body plans to let businesses with up to ₹5 crore sales pay taxes on a quarterly basis. They already have the option to file taxes on a monthly basis on self-assessment and file returns on a quarterly basis, but this facility has not found much favour among the industry, and many are opting out of this facility.
At last Friday’s GST Council meeting, the proposal for allowing quarterly tax payments by small businesses was discussed and then referred to a panel of officials to work out the modalities, finance minister Nirmala Sitharaman said after the meeting.
This facility, when offered, will offer substantial relief to over 70% of the 12.8 million registered GST payers without much impact on revenue receipts, said a person privy to the discussions in the Council.
Only two-fifths of the eligible 9 million GST payers by sales have opted for the current scheme of monthly tax payment and quarterly return filing facility, the person said on condition of anonymity. They roughly account for only 4% of the quarterly GST receipts. One factor that will aid in deciding on further compliance relaxation is the thumb rule in taxation that the bulk of the taxpayers contribute only a small share of the overall revenue collections, while the remaining few account for the lion’s share. A quarterly tax payment facility would lead to only deferring the tax dues of the first and second months of a quarter to the third month.
Many small businesses grappling with business disruption and liquidity problems during the current wave of the pandemic have been seeking relaxation in compliance requirements. They have also made the point that while offices remain shut, consultants they engage are not in a position to finalize the tax obligations and help make payments.
The Council last week offered a series of relief measures, including an amnesty scheme for past defaults in GST return filings and capped the maximum late fee that can be levied in the case of return filing delays in coming months. Businesses have also been offered relief on interest payment for delayed tax payments for March, April and May.
The GST Council, has extended the scope of the relief that was offered earlier this month.the Council has also given extra time for tax officials to complete certain procedures which fall due between April 15 and May 29, by May 30.
The interest relief is expected to help small businesses in a big way as many of them are facing cash flow problems and disruption in business owing to regional movement restrictions imposed to fight back the pandemic.