Monday, November 30, 2020
Home News Reports Truth about extra paperwork and manhours breaking the back of businesses post GST

Truth about extra paperwork and manhours breaking the back of businesses post GST

From 1st July, India would be starting a new chapter in its financial history after the Goods and Services Tax (GST) rolls out. There would be many challenges, which both the business owners and the government officials have to face, chief of which is having to adjust to the new taxation norm that does away with indirect taxes like service tax and excise duty among others.

The going might be tough for the initial 2-3 months and it is imperative that all those required to comply with GST regime go around learning about all the changes and inculcating them without any sort of panic.

While there is always a resistance to change, what is not helping the matter at all is the misconception and propaganda being spread by some in the “commentariat”, who while possibly seeking to discredit the GST, might end up piling unnecessary panic among thousands of ordinary businessmen and taxpayers.

These comments give a sense that businesses might end up investing a lot resources, especially man-hours, in just compliance. For example, reports claiming that businesses would need to hire dedicated professionals for GST management and upgradation. This isn’t something any business owner wants to hear, especially the ones who only have a turnover of about Rs 20 lakh per year.

This article aims to put some clarity about this issue.

Every month, 3 returns need to be filed by a business

One of the aspects that is scaring many is the claim that every company needs to pay 3 tax returns per month i.e. 36 tax returns per year, which will warrant a lot of paperwork and investment of man-hours.

Reality

The tax-payer has to only file one return per month and the rest of the details get auto-populated. This was explained by me previously on Twitter. The only return that involves actual data entry is your outward return, which will be easy to do if your account keeping is orderly and systematic.

The returns that get auto populated is your inward return, which fetches data from the return filed by your supplier. The other return that is auto generated is your monthly return, which fetches data from your outward return, which you fill in, and the inward return, which gets auto-populated.

All these monthly returns would then be added on while creating an Annual return. Here also, as all the data is on the server, things would get auto-populated. One simply has to log-in and double-check the data, and press submit.

Not everyone has to file 3 returns in a month

As we have seen, while technically there are three returns, in essence it is only one return that a business has to work upon (the outward return). However, not everyone is required to do it.

Different slabs
  • If you have a turnover of less than Rs 20 lakhs per annum, you literally don’t need to do anything. No need to file any sort of returns or even register under the GST, as you have been exempted under this act. Just concentrate on your business. Remember that in many states, the threshold for VAT was as low as turnover of Rs. 5 lakhs per annum, so GST actually does away with paperwork in many cases.
  • If you have a turnover between Rs 20 lakhs and 75 lakhs per annum and if you have availed the “composite scheme” (explained later in the article), you just need to file quarterly returns and not monthly returns.
  • Everyone else has to give invoice wise details of all sales of all transactions above Rs 2.5 lakhs. They also have to provide details of all sales and tax details: rate wise, inter-state wise, and intra-state for transactions below Rs 2.5 lakhs. This also would mean 1 return per month and auto-population follows.
How the auto-population of returns work

As clarified by revenue secretary Hasmukh Adhia earlier, the monthly returns named GSTR-2 and GSTR-3 are not actually returns. They are a computer-generated account of all your invoices as furnished by your suppliers. So after filing the 1st return, the government would send back two computer generated returns which need your verification and approval. He also lamented the fact that they didn’t name the forms as GSTR – 1A, 1B, 1C which clarifies that they are just three parts of a single return and not three different returns.

This GSTR-2 form sample as present here [PDF] shows which details will be auto-populated:

It doesn’t mean that you don’t have to do any work. You do need to verify the entries and then approve those, which is not really a bad thing as we can see by the following example.

Suppose you are working at a company that regularly deducts TDS from your salary, which it then pays to the government. Now when you receive your 26AS form, which details the tax you have paid to the government, you the check it to confirm whether your employer has actually paid the tax which he/she had deducted from you. If the correct TDS amount isn’t reflected in your 26AS form, you can confront your employer.

The same applies to the GSTR-2 and GSTR-3 where the taxpayer would be able to ascertain whether if all the suppliers and dealers who had deducted the tax from him/her for paying to the government actually did so. Here there is no scope of editing or additions but its a mere reflection of the tax situation.

But yes, the tallying does involve some work but there is a sweetener in the form of higher input credit which the GST offers.

How does it all compare to the existing (pre-GST) tax regime?

Currently, businesses need to file CST or central sales tax returns. Then they need to file VAT returns as per the laws prescribed by the state, which in most cases differed from state to state. So if a company operated in 20 states, it would have to keep in mind the 20 different VAT laws, and in order to do so appoint different consultants who have the knowledge of each state law before filing the return in each state. On top of it, there used to be entertainment taxes, road taxes, and others such taxes, which differed for state to state.

In post-GST era, if a company is operating in 20 different states, it still have to file returns in each state as per the turnover slab it falls into. However, GST does ensure that all the state laws like VAT, entertainment tax, road tax, etc. which were different in each state, have been subsumed by a centralised GST law. Hence the company, while filing the returns, can very well refer to that single law to get things done rather than going through different state laws.

So no more needing to appoint state specific experts for simple tasks like transporting machinery from one state to another, which earlier required the filing of road taxes in both the states having completely different road tax laws. Now just learn the GST law and you are good to go for everything.

So finally…

Even though GST may not completely simplify things, it is definitely is a step forward into a simpler tax regime. Also instead of spreading half truths and sensational stories, the critics can attack the government for last moment push and preparation.

The sensational stories and various WhatsApp rumours are getting traction because the government has not managed to do enough when it comes to educating the citizens about the effect of GST and how they need to adapt to it. Now there are reports of the Finance Ministry setting up a war room when it comes to clarifying the doubts of state and central government employees after GST launches, but it raises the question as to why the employees are not already thoroughly versed with the inner-workings of the new tax.

Also the government has set up GST awareness seminars across the country but the first one seems to have been held just this March, which is only 3 months before the actual launch date. The government should have launched awareness campaigns, put out educational advertisements in various regional dailies, set up GST information kiosks in every sub-division well before the launch date to nip such fear-mongering in the bud.

  Support Us  

Whether NDTV or 'The Wire', they never have to worry about funds. In name of saving democracy, they get money from various sources. We need your support to fight them. Please contribute whatever you can afford

Ashutosh Muglikar
Articles on Corporate Laws, Policy, Economics and Politics. Maverick. Lover of Ideas. Slayer of Hoaxes.

Related Articles

Trending now

’Is that a water bottle?’: AAP candidate Asra Fatima’s poster for Hyderabad municipal elections has netizens in splits

In a true show of patriarchy, the women's identity of AAP candidate in GHMC polls is reduced to being a wife of party member.

Indian Idol contestant reveals how she faced opposition from conservative Muslim society as singing is ‘not allowed’

The Indian Idol contestant revealed how women in her society are looked down upon if they try to excel in any field.

As Punjab ‘farmers’ hold the national capital hostage, here is how the central govt was snubbed every time they tried to reach out

From Prime Minister's national radio address to Home Minister's appeal, the central government has made various attempts to speak to the agitating 'farmers' from Punjab.

With an information overdose on social media and deluge of OTT platforms, it is time to be digitally ‘Atmanirbhar’

Getting 'cancelled' or ostracized on social media may seem harmless, but as these technologies weave themselves tighter into our day to day lives, the impacts of such cancellations can be far-reaching.

His family called our children ‘illegitimate’ because I didn’t convert to Islam’: Late music composer Wajid Khan’s wife reveals

Wajid Khan's wife has stated to Times of India that the late music composer's family never accepted her wedding under the Special Marriages Act because she had refused to convert to Islam.

7 March 1990: When Khalistani Sikh extremists killed 22 Hindus and ruined dozens of families

Abohar is a town in Fazilka, Punjab, near the India-Pakistan border.

Recently Popular

Wife of late Wajid Khan writes on her sufferings in an inter-faith marriage, says anti-conversion law should be nationalised

Wife of late music composer Wajid Khan wrote how her husband and his family had been forcing her to convert to Islam after their marriage

Actor Deep Sandhu disappoints Barkha Dutt after she provides platform to ‘distance himself’ from OpIndia report that he supports Khalistan

Barkha Dutt lamented after actor Deep Sidhu refused to condemn Jarnail Singh Bhindranwale and to call him terrorist on her YouTube channel

Who is the man in farmer protest video, lying about ‘govt snatching farmland’: Profile of an actor and Khalistan supporter

Khalistan supporter Punjabi actor Deep Sidhu has been seen spreading the lie that govt will snatch farmer's land using the new farm laws

Indian man proposes to his Australian girlfriend during Ind vs Aus cricket match, here is what happened next

While India's performance has been below par, netizens found happiness in the unusual proposal that became the highlight of the match.

‘Will not say Jai Hind, will teach lesson to Modi like we taught Indira’: Khalistani protester in presence of AAP MLA Amanatullah Khan

Sikh protester threatens to teach Modi a lesson in the save way they taught Indira Gandhi in the presence of AAP MLA Amanatullah Khan

SFJ ads appear on YouTube offering $10m support for farmers, in return, wants Sikhs to join ‘Khalistan movement’: Details

Amid ongoing farmers’ protests in Punjab, Haryana, and Delhi, it is evident that Khalistani supporters have hijacked the protests and now, they are running ads on YouTube

’Is that a water bottle?’: AAP candidate Asra Fatima’s poster for Hyderabad municipal elections has netizens in splits

In a true show of patriarchy, the women's identity of AAP candidate in GHMC polls is reduced to being a wife of party member.

Singapore: Woman who was infected with Covid-19 during pregnancy gives birth to baby with Coronavirus antibodies

The Singaporean woman was infected with Coronavirus during first trimester of pregnancy, and her newborn child has antibodies

Indian Idol contestant reveals how she faced opposition from conservative Muslim society as singing is ‘not allowed’

The Indian Idol contestant revealed how women in her society are looked down upon if they try to excel in any field.

As Punjab ‘farmers’ hold the national capital hostage, here is how the central govt was snubbed every time they tried to reach out

From Prime Minister's national radio address to Home Minister's appeal, the central government has made various attempts to speak to the agitating 'farmers' from Punjab.

Kerala: 2 years after she lost her baby after CPI(M) leader kicked her stomach, Jyotsna Jose to contest panchayat elections on BJP ticket

Kerala will hold local body elections on December 8, 10 and 12. The results will be declared on December 16.

With an information overdose on social media and deluge of OTT platforms, it is time to be digitally ‘Atmanirbhar’

Getting 'cancelled' or ostracized on social media may seem harmless, but as these technologies weave themselves tighter into our day to day lives, the impacts of such cancellations can be far-reaching.

His family called our children ‘illegitimate’ because I didn’t convert to Islam’: Late music composer Wajid Khan’s wife reveals

Wajid Khan's wife has stated to Times of India that the late music composer's family never accepted her wedding under the Special Marriages Act because she had refused to convert to Islam.

7 March 1990: When Khalistani Sikh extremists killed 22 Hindus and ruined dozens of families

Abohar is a town in Fazilka, Punjab, near the India-Pakistan border.

Farmer thanks PM Modi for mentioning him during Mann Ki Baat, narrates how the passage of Farm Bills helped him

PM Modi's Mann Ki Baat speech came just as the issue has been raked up once again as ‘farmers’ from Punjab and Haryana have marched towards Delhi to protest against the farm bills.

Rebellion inside Rahul’s Congress grows, Anand Sharma defies party line, hails PM Modi for visit to Coronavirus vaccine hubs

A day after Congress criticised PM Modi's visit to Coronavirus vaccine hubs, senior Congress leader Anand Sharma has defied the party line

Connect with us

245,563FansLike
491,013FollowersFollow
20,200SubscribersSubscribe