New Delhi: Federal indirect tax body the goods and services tax council on Saturday decided to extend the interim procedural relaxations available to exporters, small businesses and e-commerce firms by three to six months and made e-way bills compulsory for inter-state shipment of goods from 1 April.
The council also decided to retain the current tax return filing system for another three months before it could be replaced with a simpler version with safeguards against tax evasion.
The decisions to roll out electronic permits for inter-state shipment of goods from the beginning of next fiscal and to build in new safeguards in the proposed new return filing process indicate that the risk of tax evasion is worrying members of the council.
The council remained sympathetic to the concerns of exporters and small businesses in enforcing the compliance requirements.
As per decisions taken at the at its 26th meeting of the council chaired by finance minister Arun Jaitley in New Delhi, exporters will continue to benefit from the interim measure announced last October to ease their liquidity problems by way tax exemption on their raw materials under pre-GST schemes such as advance authorization (AA) and export promotion capital goods (EPCG). This relief, which was to expire by end of March, will now be available till 1 October. The pre-GST schemes are being continued as paying taxes first and seeking refunds later—the norm in GST—affects liquidity of the exporter.
Also, the requirement of large customers of small businesses having to pay taxes on behalf of their suppliers under a system called reverse charge has been deferred till 30 June. This requirement was suspended last October till end of March this year to ease the compliance cost of businesses.
Two other sectors that will continue to get interim relaxations beyond March for another three months are e-commerce firms and suppliers of goods and services to government agencies. The requirement of e-commerce platforms to collect 1% tax at source from the final consumer and pass on the tax credit to the vendor using the e-commerce platform has been deferred till 30 June. Also, government agencies will not have to deduct 1% tax at source while paying their suppliers till 30 June.
E-way bills will be made applicable to movement of goods within the state in phases before 1 June, clubbing several states together. Harishanker Subramaniam, national leader, indirect tax, EY India, said that with GST revenues more or less stagnating, implementation of e-way bill from 1 April for interstate movement of goods is expected to plug leakages and shore up revenues.
Finance minister Arun Jaitley, who briefed reporters after the meeting, said that central and state tax officers felt that return filing should be simpler, yet it should leave no scope for tax evasion. Two models are presently under consideration and a final decision is yet to be taken.
“The council felt that there should be one simple return a month which is not prone to tax evasion…No conclusive decision is taken. The existing system will continue for three more months," said the minister.