New Delhi: Arguably one of India’s most historical tax reforms, the Goods and Services Tax (GST) was rolled out exactly a year ago. Flagged off on the midnight of June 30, 2017, the Narendra Modi government counts the new tax among its top achievements in the past four years.
Speaking to News18.com, GST Network chairman Ajay Bhushan Pandey said the Centre will be coming up with a new single GST return form much like the income tax return form and will be using the second year to bring about further simplification in the system. GST Council has also approved to make the GST Network a state-owned entity, he added.
Edited excerpts:
How do you analyse the first year of roll-out of GST?
The first year has been one of great transformation for our country. One of the major tax reforms got implemented, and finally now it has become stable and adopted within a period of one year, which is quite a massive task. If you consider the situation prior to GST rollout, there were 35 states and Union Territories, each having their own value added tax (VAT) system, their own laws, own registration system, return filing system and even the IT system was different.
Each state also had central excise and service tax. As many as 37 different forms of taxes got subsumed into one uniform system and it truly became one nation, one tax and then one system.
If you see the number of taxpayers that migrated from the earlier system, the number adds up to 63-64 lakh. Today we have 1,13,00,000 tax payers registered into the system and all of them fall under one single law and then one system, one interface, one type of form. So this is the kind of massive transformation that was attempted through GST and it is a matter of satisfaction and pride for our country that we could do this in a period of one year. This kind of a tax reform in a huge country and with such federal structure… I don’t think it was ever attempted anywhere in the world.
Are there other countries interested in the model that india implemented?
In certain high-profile meetings held for exchange of ideas, others countries have appreciated the system, but none of the countries have expressed formal interest with us so far.
It’s alleged that inputs tax credits are being used for tax evasion. Are you looking at information technology for plugging the gaps?
The good thing about GST is that every sale or purchase information is available on the system and, therefore, anyone trying to break the chain can be tracked.
Now, in the pre-GST system, it was very tough to figure this out. The systems were neither fully digital and nor connected. Each state’s system was different, so there was no way information could have been shared.
Now, the whole design is such that one gets input credits only if one’s seller has uploaded the selling invoices. If it is found that the input credit has been taken without seller having uploaded the selling invoices, it will be very easy to identify. The use of appropriate data analytics and various other IT tools is a part of the whole exercise so that one can ensure better tax compliance.
It will also deter many such faulty taxpayers. It will incentivise the honest taxpayers.
All those who aren’t taxpayers or dealers will eventually realise that perhaps it’s difficult to remain hidden for a long time and they will also come round soon.
Do you have a ball park figure of the evasion happening right now?
No, I wouldn’t hazard any guess because you know this is not something which I can… If at all, this has to be done by field-level officers or appropriate surveys and so on. So far as the GST is concerned, it will not be appropriate for us to get into this kind of estimation because this is not our forte.
Is there a possibility of coming up with a new GST-R form? If yes, what will it be like?
Yes, because, as you may recall, in the beginning when the GST system was launched, we had this system of GSTR 1, 2 and 3 and then because of certain difficulties GST-R 1 and 2 were put on a hold and GSR-R 3B was introduced. So people are filing GST-R 1 and 3B. As of November, the GST Council conducted a meeting to work on single, unified GSTR form instead of GSR1, 2, 3 and 3B.
The Council asked us to go for one form and also to make that very simple. The broad design has been prepared and it has been approved by the GST Council in the last meeting and now the work is actually going on to implement this and it will also require some changes in law and rule. Of course, it will require a change in IT system. So the GST Council has given us six months; we hope to do it in that time.
The changes will broadly be similar to what people are filing, but then, it will not have something like GSTR 1, 2 and 3 where the information flows from one dealer to the other and then back and forth. It will be a unidirectional flow For example, all sellers will upload their sale in invoices or will file their sale details and they don’t need to give purchase details. The sellers will be uploading their sale details and whatever has been sold by them becomes a purchase for the other side. The buyer will get an input tax credit based on the sale invoices uploaded or sales which have been disclosed in the returns by their sellers. So it becomes a unidirectional flow and then the input tax credit will be available on the uploaded sale invoices.
I would say it is more similar to TDS and income tax.
How far are you from making GSTN a state-owned entity?
In the last GST Council meeting, they approved the proposal that GST Network should be 100 percent government owned, this is central and state government. Action has been initiated. The shares have to be transferred, which is presently being held by the non-governmental, entity to the government entity.
Any tentative deadline?
I believe a couple of months.
What’s the big plan for GST in the coming year?
Our system has become stable and we have undertaken a big exercise of simplification. Towards that, as I mentioned, we are attempting a single form. We will try to make it as simple as possible. So the small dealers don’t have to go through all the sections of the form, only the relevant sections will be displayed. It will be like an interactive form where only the relevant questions are asked and based on that the entire return is filed.
We are also working on if the sellers upload their invoice as and when they generate it. At the end of the month, a draft return could be prepared on the basis of that. So that is another exercise we are doing.
We are also undertaking an exercise wherein we engage accounting software, which could be made available to the small taxpayers, so that they can use that in their business and in filing their returns.
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