Govt expects GST rate cuts, simplified returns to improve compliance

The rate cuts on over 100 products, including TV sets, fridges and washing machines, across 50 product categories, mainly in the middle-class consumer bracket, are expected to result in better compliance.

Governments, including the centre and the states, also expect better compliance and improvement in consumer demand to help bridge the Rs9,000 crore revenue loss on this score.

The GST Council on Saturday also approved new formats and business process that offers the option of filing quarterly return with monthly payment of tax in a simplified return format by the small tax payers.

All taxpayers excluding small taxpayers and a few exceptions like input service distributors (ISDs), etc, shall file one monthly return. The return is simple with two main tables — one for reporting outward supplies and the other for availing input tax credit based on invoices uploaded by the supplier.

Invoices can be uploaded continuously by the seller and can be continuously viewed and locked by the buyer for availing input tax credit. This process would ensure that very large part of the return is automatically filled based on the invoices uploaded by the buyer and the seller. Simply put, the process would be “Upload – Lock – Pay” for most tax payers.

Taxpayers would have facility to create his profile based on nature of supplies made and received. The fields of information which a taxpayer would be shown and would be required to fill in the return would depend on his profile.

`Nil’ return filers (no purchase and no sale) shall be given facility to file return by sending SMS. 

The Council approved quarterly filing of return for the small taxpayers having turnover below Rs5 crore as an optional facility. Quarterly returns will  be similar to main returns with monthly payment facility but for two kinds of registered persons – small traders making only B2C supply or making B2B + B2C supply.  For such taxpayers, simplified returns have been designed called  Sahaj and Sugam. In these returns details of information required to be filled is lesser than that in the regular return.

The new return design provides facility for amendment of invoice and also other details filed in the return. Amendment shall be carried out by filing of a return called amendment return. Payment would be allowed to be made through the amendment return as it will help save interest liability for the taxpayers.

About 93 per cent of the taxpayers have a turnover of less than Rs5 crore and these taxpayers would benefit substantially from the simplification measures proposed improving their ease of doing business. Even the large taxpayers would find the design of new return quite user friendly.

The centre aims to collect up to Rs1,10,000 crore on a monthly basis from GST this fiscal. Finance ministry estimates put the revenue loss due to Saturday’s rate-cut on 17 white-goods to be around Rs8,000 crore annually, while on other products and services, the amount would be approximately Rs1,000 crore, taking the total loss to Rs9,000 crore. Finance minister Piyush Goyal, however, said the revenue loss would be ‘nominal’.

While the revenue foregone will help reduce burden on consumers, officials say better compliance will improve tax collection and an overall improvement in the GST revenues.