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Total Number of Subscribers: 962 |
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Date: 10th February 2010 |
Compiled by: M Sathya Kumar <= /span> |
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GST : Practical approach for
implementation Lot has been said about GST and its
implementation in G – Good S – Simple T – Transition From various different and complex tax syste=
ms
to one unified, stable and simple tax regime. However one should consider the various
practical difficulties in proper implementation of GST. The following are
some of the important aspects which need consideration for effective
implementation of GST in India. (1) System upgrade : All over India different states have taken
initiative at their own level for E-Governance and computerisation of Sal=
es
Tax or VAT-related work. As there is no proper customisation of the softw=
are
developed, one cannot generate various analytical reports and information=
. Technology should be used in such a way that=
not
only blue chip companies, but a small retailer also can use it for
compliance. The system should be evolved in such a way that dealers and
consultants are not required to visit offices for registration, return su=
bmission
or allied work. Services of our I.T. Companies should be used in developm=
ent
and implementation of software for one of the finest reforms ever in
India’s indirect taxation arena. In spite of amendments in procedural complia=
nce
in income-tax, the new system has been readily accepted by people and one=
is
hoping the same on indirect tax front. (2) Data transition from old=
tax
system (VAT) to GST : Technology should be used for transition of =
data
or master records of dealers from the old tax system to new tax system. It
should be borne in mind that it has not been long when VAT was implemente=
d.
Exhaustive details relating to dealers have already been asked for and are
available with the Department. Database of the dealer is updated on real-=
time
basis. Since all the information of existing dealers is already available
with the Sales Tax authorities, requirement of the same information again=
for
GST would lead to duplication of work and wastage of time and energy. Dea=
lers
should be asked only to confirm the correctness of it. Smooth implementation of GST will bring in
support and confidence of the dealers and the Department with the new tax
system. They will be free from unwarranted paperwork and there would be l=
east
possibilities of commitment of any error and thereafter its rectification=
. (3) Strategy for disposal of
matters in old tax structure : At present assessments under the Bombay Sales
Tax Act are still pending. Assessments for the period 1998-99 and onwards=
are
still going at various offices. It is difficult to foresee what will happ=
en
in April 2010/or April 2011 when GST will be implemented. On implementati=
on
of GST we will have to deal with three different Acts : (1) Old tax system (e.g., BST in
Maharashtra) (2) VAT (With effect from 1-4-2005 as in
Maharashtra, for other) (3) Proposed GST A strategy should be developed for clearance=
of
long pending assessments. Otherwise it would become a complex structure to
deal with. Even at present for VAT in Maharashtra,
following are the pending matters with respect to year 2005 i.e.,
first year of VAT implementation : (a) Advisory Visit (b) Business Audit (c) Refund Audit (d) Pending Assessments (e) Matters before various Appellate
Authorities, Tribunal & High Court, etc. (4) Training to staff of
Departments : Government and bureaucrats are of the view t=
hat
the dealer should be updated of various tax laws. But for proper function=
ing
of tax system both i.e., dealer and Department staff should be well
versed with the tax system. At the time of implementation of VAT, we have
observed that the Tax Department which is supposed to answer the queries =
of
dealers/practitioners is rather itself confused and raising so many queri=
es. Aspects to be taken care of&nbs=
p;: Dealers and the Tax Consultants/Practitioner=
s are
required to comply with all the tax matters through the Departmental set-=
up. It has been seen in the current VAT regime t=
hat
the dealer is the ultimate responsible person who needs to comply with the
tax provisions, but what about the department staff. Proper training shou=
ld
be departed to the staff and officers of the Sales Tax Department about t=
he
Acts/Rules/Provisions. The officer should be fully aware of the new
laws and provisions thereof. Many decisions are being taken at top level,=
but
it is the duty of top-level management to percolate the new development to
the juniors, staff and officials at various spread-out locations. It will
develop the confidence of the Department in the new tax system. According=
ly
advance training session should be held to groom the officers about new t=
ax
structure. (5) Common platform : Just like income-tax, single software should=
be
developed for all the states. This will help both the Government and Sales
Tax authorities. Unless an appropriate model is evolved for maintaining
status quo for tax administration, both taxpayer and administration will =
be
at dilemma. The following are some of the advantages of common software
platform : (a) Speedy data sharing from one state to
another. (b) Control and monitor over inter-state
transaction, imports and exports. (c) Fast cross-checking of transaction resul=
ting
in saving of time and money. (d) Will inculcate global business atmospher=
e. (e) Increase the free trade and movement of
goods and services. (f) Curb the black money and off-the-record
transaction. (g) Since PAN is the base for the registrati=
on
records of all the dealers, information can easily be shared across vario=
us
taxation structures such as (1) Direct Tax (2) Customs Duty (3) Excise Du=
ty
(4) Service Tax. This will also act as catalyst for the proje=
ct
undertaken by the Government of importing Unique Identification Number ac=
ross
the country. All this technological upgradation can be ve=
ry
well undertaken when we have the best of I.T. companies like TCS, Wipro,
Infosys and many more. (6) Collaborating with the
various professionals : Professionals like, Chartered Accountants,
Company Secretaries, Cost Accountants, Tax Consultants, and Tax Practitio=
ners
should be made aware of the Acts, Rules, and various provisions. These are
people or intermediary partners for the Government to communicate the
problems of the taxation system properly to the last person of the chain =
in
best of manner. Compliance with the requirement of income-tax has been
improved because of the strong intermediary professional force. The same
thing can be very well achieved on indirect taxation also. The following
things can be done for this purpose : (1) Spreading awareness through various
professional bodies in India like C.A., C.S., ICWAI, IIMs, educational
institutes, etc. (2) Providing web-based platform for all the
updates and FAQs about the tax system. (3) Organising programmes and seminars to up=
date
the masses about new tax levy, similar to the various programmes organise=
d by
the Ministry of Company Affairs (MCA) for the investor awareness programm=
es. (7) Uniform forms and
compliance : Dealer should have common forms to comply wi=
th
the Sales Tax requirement. The same forms are available all over India for
income-tax (e.g., ITR1, ITR2, and Pan Application, etc.), service =
tax
(ST1, TR6 Challan, and STR, etc.), Excise, Customs and others, but this is
not the case with local Sales Tax Acts. Each state prescribes their own f=
orms
which acts as an obstacle to simplification. When in case of Central Sales
Tax Act we have Registration Forms, Quarterly Return Forms, C-Form, etc. =
of
same format over all states, then this is also possible for the local Sal=
es
Tax Act. Along with dealers, professional, service
providers, tax consultants will also be in much better position to perform
their responsibilities. For example, in some States at present we ha=
ve
Vat Audit Report of 2 or 3 pages and in another state like Maharashtra we
have Vat Audit Report in Form 704 of nearly 80 pages. It’s not about the number of pages, bu=
t what
is required is uniformity and simplicity in the compliance and procedural
aspects of GST all over India. (8) Promoting awareness among
public : General public should be made aware of the n=
ew tax
system to be implemented, well in advance. Sufficient time should be give=
n to
the public at large so as to understand and prepare them for the transiti=
on.
Few suggestive steps for this : (a) Advertise in print media (b) Advertise through T.V. (c) Advertise and make propaganda through ne=
ws
and publications. (d) Arranging seminars and conferences. (e) Taking the corporate sector into confide=
nce
and sharing ideas directly with them. Concluding : It is recommended to the concerned authoriti=
es
that hasty implementation of any tax system will hamper the future progre=
ss
of tax structure. To ensure smooth transition to the new tax regime, it is
necessary to assess the overall impact of the new tax structure on all fa=
cets
of business and carry out requisite changes in a timely manner. Public
mindset is ready for the change, only because they are thinking that
something better will come in GST. Hope the suggestions come helpful for better
implementation of GST in transforming our economy from developing to a de=
veloped
one. Article by Mayur Zanwar Chartered Accountant |
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