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TAXING Times Ahead!

Thursday, July 6, 2017, 17:21 Hrs  [IST]

By the time this piece comes in black and white, the long anticipated uniform indirect tax regime, Goods & Services Tax (GST) would have become a reality. The Finance Minister himself set off the ‘No Excuse’ warning bell after the 17th round of GST Council meet to those who were still in the wait and watch mode. The Government simply did not care for who is ready and who is not. The roll out is destined to happen as announced, come what may! The debate whether the change over to the new regime actually fulfills the vision of ‘one country – one tax’ has no relevance any more. The debate and discussions will now centre around the ‘confusion’ which will prevail after the switch over in business and industry.

But, of course, such major changes are bound to create hiccups and confusions, in the short term. The perception in general is that everyone will learn it through trial and error, and even the policy-makers are conditioned for an initial two months ‘test run’. However, it is still unclear how fast a large section of small time vendors, distributors and retailers in the country will adapt to this e-way based system.

The tourism industry stakeholders can heave a sigh of partial relief as the GST Council reconsidered the ‘Luxury’ threshold set at INR 5,000 for hi-end hotel rooms for 28% GST has been raised a notch up because of timely hue and cry from stakeholders and the tourism department of the government itself. Although the demand was for a uniform 12% GST across the industry, it seems that the industry is seemingly satisfied with the final slabs set by the government.

Having received clarity with regards to the rates, etc., what is now giving everyone sleepless nights is the cumbersome compliance mechanism that they have to adhere to under the new regime. It is a major worry for small and medium enterprises how they would meet the reporting requirements and how many man hours that would extract in the coming months. The new regime mandates that all registered taxable entities are to file three monthly returns - one for supplies, one for purchases and one composite. In addition, an annual return is necessary, nullifying all the big promises of ‘tax simplification” for all practical purposes.

For hotel industry stakeholders, there even more painpoints to tackle, as energy and liquor have been kept outside the ambit of the GST. They have to maintain separate accounting records for these items in addition to the records and filings that the GST mandates. Moreover, being out of the GST, the hotels won’t be able to avail input credit for these items.

In short, major promises of the proponents of GST like ‘one nation – one tax’, ‘simplification of tax regime’, and ‘ease of doing business’, etc., remained a chimera at the end!

P Krishna Kumar
Assistant Editor

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