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In Focus

October, 12

GST filing plagued by low compliance

About 70 percent of the assessees under GST had filed detailed sales returns for July, a figure that reveals low compliance, as per officials. Last Tuesday was the final deadline after the previous one was extended twice earlier. Tax officials are left scratching their heads assessing why about 2mn of those eligible had not filed the returns.

Earlier, the lower than expected returns in the first two months of GST implementation had prompted the conduct of a survey to uncover the underlying reasons. Ever since the GSTN window for July tax returns went online, a flurry of complaints have been received. Sometimes the portal crashed due to heavy traffic. While some businesses have claimed that their taxes have been paid, the GSTN receipts don't reflect it. Others said that the receipts reflected errors. Then, there were server delays and sessions being timed out.

It is not that government was not aware of tax payee behaviour. In fact, in an interview, GST Network Chairman Navin Kumar said, "We have studied the taxpayer behaviour in terms of return filing for service tax, central excise, and VAT and we found that 50% of the taxpayers file their returns on the last day, and during that last day, most of them are between 4-5 PM. About 30% file on the penultimate day and only 20% file before that. We have kept that in mind while designing the system."

However, the compliance levels do not reflect the sort of preparation that was claimed. Overall, the implementation of the GST has been such that it cannot be claimed to be a "Good and Simple Tax" anymore. An idea that was, in essence, supposed to be a single band, no exemption, straightforward and comprehensive reform, has taken a very complicated shape under the BJP-led government. The current policy structure stands in complete contrast with the usual GST good practices adopted worldwide.

On account of this, the economy has suffered the most. Only recently, the International Monitory Fund (IMF) blamed the “lingering impact” of demonetisation and GST for the expected slow down during the current and the next year. According to the IMF's projections, India will grow at 6.7% in 2017 and 7.4% in 2018, 0.5 and 0.3 percentage points less than the projections earlier this year, respectively.  The World Bank too, in a recent report, said that one-time policy events -- disruptions from demonetisation and uncertainty surrounding GST -- slowed India’s economic momentum.

These highly avoidable misadventures are the result of PM Narendra Modi's reluctance to listen to critics, as pointed out by Congress Vice President Rahul Gandhi. He recently said, "He (Modi) does not listen to anyone, but we will try to make him do so by organising agitations. We will draw the prime minister's attention and try to convince him to simplify the GST norms," Mr. Gandhi said.

We hope Mr. Modi is listening, as the economy is too precious to be tinkered with.

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