Your GST set to change; Modi government targets 180 issues

You have barely got familiar with your GST and now it has been revealed that the new tax may well go through transformational changes soon. As the Goods and Service Tax (GST) will complete its first anniversary on July 1, the law and rules of this indirect tax will undergo a major transformation as the GST Law Review Committee "has identified around 180 issues", said a DNA report, citing a source in the know of the changes in offing.
 
The report said that the GST Law Review Committee "has identified around 180 issues" to be put up in front of the GST Council, a decision-making body consisting of central and state finance ministers and their representatives.
 
"The (GST law review) panel has identified about 180 issues and put forward its suggestions before the GST Council. The Council is looking into the suggestions and some of these are proposed to be discussed in the monsoon session (slated to start from July 18) of the Parliament. The Law Drafting Committee is working on the draft," said the report quoting the source.
 
The source reportedly said that several tweaks recommended by the committee include single registration for a taxpayer across India, change in the definition of 'supply' under Section 7 of the central GST (CGST) Act, doing away with the precondition of matching returns with claims for availing input tax credit (ITC), trimming the ITC negative list, further simplification of returns filing, inclusion of petroleum products, merging of 12% and 18% rates and a host of other such alterations.
 
Further, the source reportedly said that in order to address one of the major grouses of taxpayers about the multiple registration under GST, the law review panel was looking into the possibility of a single GST registration pan India.
 
From time to time, the GST Council has made several changes in the GST law and guidelines to ensure its smooth functioning, and GST rates were also rationalised late last year to reduce adverse impact on businesses and consumers.
 
"Every person or business firm that is liable to take GST registration will have to register for GST separately for each of the states in India where he/she has a business operation and/or where he/she conducts commercial activities as per GST registration rules," according to the GST rule today. 
 
Saying that the issue of simplification of returns filing will also be taken for discussion, the source told DNA, "It is being evaluated if some of the returns could be combined to make return filing simpler." 
 
In what could come as a major relief for those whose ITC claims are stuck due to lagged filing of claims, the panel has reportedly suggested that "matching need not necessarily be a pre-condition for ITC", said the source, adding "If ITC does not match on account of wrong claim, penal provisions can be invoked at a subsequent stage." 
 
The government may also change the definition of 'supply', which has indigenously designed concepts of 'composite supply' and 'mixed supply', he reportedly said, adding that the panel has called for a single audit for all taxes against the multiple audits by different authorities.
 
"Scrutiny would be a risk-based intervention rather than subjective or threshold-based one. The regime of empowerment of state governments to administer Central laws is a well thought of, given that the rate of tax/ laws / exemptions are uniform throughout now," the source told DNA.
 
Owing to the recent confusion over divergent rulings on same issues by Authority for Advance Rulings (AARs) in different states, the committee has asked for the establishment of a centralised AAR, he said, adding that the panel was also exploring the possibility of including petroleum products under GST; "central excise duty could be done away with but there will be VAT on them".
 
Further to simplify the GST rate structure, the possibility of merging the 12% and 18% GST rates was reportedly being considered.
 
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M S Mani, partner, Deloitte India, reportedly said that procedural simplifications would help in improving the GST compliance, adding "There are several changes that are required in order to make GST easier for smaller businesses and some legislative changes to incorporate the decisions of the GST Council. 

"Procedural simplifications would significantly improve the GST compliance and ensure that the percentage of return filers becomes much higher than 70%," he added.