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LATEST NEWS UPDATES | GST Is Proving to Be a Procedural Nightmare for Small Service Providers and Traders -MK Venu

GST Is Proving to Be a Procedural Nightmare for Small Service Providers and Traders -MK Venu

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published Published on Jun 17, 2017   modified Modified on Jun 17, 2017
-TheWire.in

Most of the outreach efforts of the finance ministry to explain and create awareness about the GST have been with the bigger industry players.

It is becoming increasingly clear that that neither the Centre nor states are adequately prepared to launch the goods and services tax (GST) on July 1. The sheer multiplicity of taxes, as also different tax slabs for the same commodity or service, is a problem which has been analysed by experts and practitioners alike. Foreign and domestic investors are already suggesting that the design of the GST, such as it is, will produce sub par outcomes in terms of driving higher growth or achieving lower inflation.

However, in the short to medium term, it is the sheer complexity of procedures which might make the GST a huge nightmare for millions of small service providers and traders who are already out on the streets protesting in different parts of the country. Markets were shut down in Delhi and other cities as a mark of protest this week.

One common complaint from traders and shopkeepers is they have no infrastructure to be GST compliant. What do they mean by this? Praveen Khandelwal, president of Confederation of All India Traders explains the small shopkeeper/traders’ predicament and says,”There are about 100 million small traders and shopkeepers and nearly 60% are computer illiterate. So at least 60 million traders are not computer enabled. But the GST can be complied with only via a computer system which connects with the GSTN network on which all businesses, traders, shopkeepers will be registered”.

This is one problem the government has not adequately anticipated. The Centre says it has created some 1,000 plus tax filing hubs for traders and shopkeepers, but Khandelwal argues these are just not adequate to deal with tens of millions of GST assessments. One could well witness long queues of the kind seen during the demonetisation months, as traders and service providers rush to file their mandatory returns three times a month. Whether the GSTN system be able to take such concentrated load on the 10th, 15th and 20th of every month is something which remains to be tested.

An even bigger nightmare awaits these service providers in different sectors. India’s leading tax lawyer, Arvind Datar, explained this lucidly in a presentation a few months ago in Chennai. Datar said the procedures for filing returns are daunting. For instance, he said, a provider of diagnostic services who operates in several states will now have to file 49 returns annually for each state. So if the service provider is in ten states the firm will have to file 490 returns annually. Currently, only two returns are filed by such services firms at the central level. So with 60% of India’s GDP coming from services sector one can imagine the kind of impact the complex GST procedures will have on the services business which so far only dealt with one central authority. Financial services and non-banking financial companies will have to deal with 29 states for filing returns if their customers are spread all over India.

Please click here to read more.

TheWire.in, 17 June, 2017, https://thewire.in/148289/gst-implementation-small-traders/


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