New Delhi: A ministerial panel led by Bihar deputy chief minister Sushil Kumar Modi has moved closer to designing a simplified system for filing goods and services tax (GST) returns which could make compliance easy and yet tackle tax evasion effectively. A final decision on the issue, however, will be taken by the GST Council chaired by finance minister Arun Jaitley.

The ministerial panel decided to refer the two models of simplified returns it studied earlier and a third one combining the best features of the two, to the GST Council, after it brainstormed the finer details with experts and industry bodies, Modi told reporters at a briefing on Tuesday.

The panel, which had a day earlier discussed the ‘reverse charge mechanism’ of large businesses paying taxes on behalf of smaller material and service suppliers, will discuss the issue again next month to decide how to go about implementing it.

The reverse charge mechanism and matching of invoices by buyers and sellers were earlier suspended to give relief to businesses from the rigors of compliance as they struggled to settle into the new tax system which also faced technology-related glitches.

Rolling out the anti-evasion measures is key to boosting GST revenues. In March, GST revenue stood at Rs85,174 crore, slightly lower than the receipts in the previous month.

A third anti-tax evasion feature of GST—e-way bills or electronic permits for shipping goods—is now in the process of being implemented throughout the country. After rolling out e-way bills for interstate movement of goods from 1 April, states are now rolling out the same for local movement of goods within the states. Modi explained that six states—Jharkhand, Bihar, Tripura, Madhya Pradesh, Uttarakhand and Haryana—will make these electronic permits compulsory for local shipment of goods from 20 April. From Sunday, five states—Kerala, Andhra Pradesh, Telangana, Uttar Pradesh and Gujarat—rolled out e-way bills. The new system recorded a smooth start with over a million e-way bills generated on Monday—the first working day after its implementation in the five states.

In the case of simplifying GST returns, the key points of contention that remain include whether a buyer of goods should be given provisional credit based on his summary returns or whether grant of tax credits should be linked with the actual payment of tax by the supplier. In the model preferred by the ministerial group, provisional credit will be granted to a buyer subject to certain conditions.

Modi said that the ‘fusion model’ was chosen keeping in mind three principles—safeguarding interest of revenue, avoiding inconvenience to taxpayers and avoiding a complex system.

Experts said the authorities are keen to implement the revised return filing system after adequate due diligence. “This process, however, may take some time with possible changes in laws. It seems the new GST returns may only be introduced either in the last quarter or the next year. Till then, it’s likely that the current summary return on a monthly basis will continue," said Pratik Jain, partner and leader of indirect tax at PwC.

Close