Question – GST compliance were supposed to be easier and less complicated but actually the journey of GST has been a rollercoaster ride with many ups and downs and becomes a nightmare with multiple changes in tax returns and other reporting requirements. You are required to analyze any 5 issues faced by tax professionals and the tax payers under GST regime and also provide recommendations for the issues faced by them.

Answer- The implementation of the Goods and Services Tax (GST) was intended to simplify and streamline the taxation system, providing a more uniform structure across India. However, the journey of GST has proven to be a complex and dynamic one, marked by a series of challenges for both tax professionals and taxpayers. In this context, it is crucial to analyze and understand the intricacies that have arisen under the GST regime. This discussion will delve into five significant issues faced by tax professionals and taxpayers, exploring the complexities associated with GST returns, technical glitches, classification and rate changes, input tax credit, and the compliance burden on small businesses. Subsequently, recommendations will be provided to address these issues and enhance the effectiveness and efficiency of the GST framework.

1. Complexity in GST Returns Filing:

   – Issue: The frequent changes in GST return formats and filing procedures have led to confusion and increased complexity for tax professionals.

   – Recommendation: Simplify the return filing process by providing stable and user-friendly formats. Regular training sessions for tax professionals can help them stay updated.

2. Technical Glitches in GSTN Portal:

   – Issue: The Goods and Services Tax Network (GSTN) portal often faces technical glitches, causing disruptions in filing returns and compliance.

   – Recommendation: Invest in robust IT infrastructure and conduct regular maintenance to ensure the GSTN portal’s smooth functioning. Provide alternative means for filing during downtimes.

3. Ambiguity in Classification and Rate Changes:

   – Issue: Ambiguities in the classification of goods and frequent changes in tax rates lead to challenges in determining the correct tax liability.

   – Recommendation: Provide clear guidelines and examples for classification. Minimize frequent rate changes and ensure timely communication of any revisions.

4. Input Tax Credit Reversal Challenges:

   – Issue: Complications in availing and reversing Input Tax Credit (ITC) due to mismatches or delayed supplier filings.

   – Recommendation: Implement a robust reconciliation mechanism and ensure timely communication between taxpayers and suppliers. Simplify the ITC reversal process with clear guidelines.

5. Cumbersome Compliance for Small Businesses:

   – Issue: Small businesses often find GST compliance procedures burdensome and resource-intensive.

   – Recommendation: Introduce simplified compliance procedures for small businesses, such as quarterly return filing and reduced documentation requirements. Provide user-friendly tools and resources for better understanding.

By addressing these issues, policymakers can contribute to a more stable and predictable GST environment, easing the compliance burden for both tax professionals and taxpayers. Regular feedback mechanisms and stakeholder consultations can also help in refining the GST framework over time.

6. Reverse Charge Mechanism Challenges:

   – Issue: The complexities associated with the reverse charge mechanism, especially in service-related transactions, create challenges for businesses in determining their tax liabilities.

   – Recommendation: Provide detailed guidelines and examples for transactions under reverse charge. Simplify the mechanism where possible and offer support for accurate compliance.

7. E-Way Bill Issues:

   – Issue: Issues related to the generation and management of E-Way Bills, including technical glitches and challenges in aligning E-Way Bills with actual goods movement.

   – Recommendation: Improve the E-Way Bill system’s reliability, address technical glitches promptly, and integrate it seamlessly with other GST processes. Provide user-friendly interfaces and conduct awareness campaigns for stakeholders.

8. GST Audit and Assessment Complexities:

   – Issue: The complexities involved in GST audits and assessments, including unclear criteria for selection and prolonged timelines, pose challenges for businesses.

   – Recommendation: Define clear criteria for audit selection, streamline the audit process, and establish reasonable timelines. Provide transparent communication and guidance during the audit and assessment procedures.

9. Interstate Transaction Challenges:

   – Issue: Businesses engaging in interstate transactions face complexities related to IGST, with challenges in determining the appropriate place of supply and understanding tax implications.

   – Recommendation: Clarify guidelines for determining the place of supply in interstate transactions. Provide comprehensive training for businesses involved in interstate trade to enhance their understanding of IGST implications.

10. GST Refund Delays:

    – Issue: Delays in processing GST refunds, especially for exporters, lead to working capital issues and increased financial strain.

    – Recommendation: Streamline and expedite the GST refund process. Implement mechanisms to address common issues causing delays, such as mismatched data or incomplete documentation. Enhance communication channels for timely dispute resolution.

Addressing these additional complexities will contribute to a more seamless and efficient GST regime, fostering compliance and reducing the burden on businesses and tax professionals. Regular reviews and feedback loops can further refine the system based on real-world challenges encountered by stakeholders.

In conclusion, the journey of GST in India has indeed been a rollercoaster ride, marked by various challenges that tax professionals and taxpayers navigate on a regular basis. The complexities in GST return filing, technical glitches, ambiguities in classification, challenges with input tax credit, and the burdensome compliance procedures for small businesses collectively underscore the need for continual refinement of the GST framework.

Addressing these issues requires a multi-faceted approach, including stable and user-friendly processes, robust IT infrastructure, clear guidelines, and simplified compliance procedures. The recommendations provided aim to create a more predictable and streamlined environment, fostering better compliance and reducing the challenges faced by stakeholders.

As the GST framework evolves, ongoing dialogue between policymakers, tax professionals, and businesses will be essential to ensure that the system remains responsive to the dynamic needs of the economy. By learning from past experiences and proactively addressing challenges, the GST regime can move towards achieving its intended goals of simplicity, transparency, and ease of compliance.

Continual vigilance and adaptability are crucial as the GST framework matures. The complexities surrounding reverse charge mechanisms, E-Way Bills, audit and assessment processes, interstate transactions, and refund delays further emphasize the need for a comprehensive and responsive approach.

Efforts should be directed towards enhancing the reliability of systems, providing clarity through comprehensive guidelines, and fostering a business-friendly environment. Regular training sessions, awareness campaigns, and simplified processes can empower businesses and tax professionals to navigate the intricacies of GST with greater confidence.

 While challenges persist, they also present opportunities for refinement. The success of the GST regime hinges on a collaborative effort between policymakers, tax professionals, and businesses to create a tax environment that not only meets regulatory requirements but also facilitates economic growth and ease of doing business. By addressing these complexities head-on, India can pave the way for a more efficient and effective GST system in the years to come.

Author – Varshita kushwaha, a Student of University of petroleum and energy studies

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