New Delhi: The government is devising a way to ensure that a buyer does not suffer in case of non-payment of tax by the seller under the goods and services tax (GST), finance minister Piyush Goyal said, as the government looks to appease the politically important trading community ahead of the general election in 2019.

If implemented, it will be among a series of steps taken by the government to pacify traders forced to reorient the way they do business, as GST moved them on to an electronic invoice-based system from a so-called “kucha bill" system that was the norm earlier.

The GST Council’s law review and information technology committees will look into how to further simplify this process for traders, Goyal said at an event organized by the Confederation of All India Traders.

Under GST, the buyer of a commodity can claim input tax credit only if the seller has paid tax on the same. In case of non-payment of tax, the buyer cannot claim input tax credit.

Traders had expressed concerns that there may be instances wherein the buyer does business with an unknown seller and incurs losses because the latter does not pay tax, Goyal said, adding that the government is devising a way by which the buyer pays tax on behalf of the seller using the latter’s GST identification number (GSTIN).

In this case, the buyer can deduct the tax amount before making the final payment to the seller, he added.

The finance minister said it was the intention of the National Democratic Alliance (NDA) government led by Prime Minister Narendra Modi to resolve the issues faced by traders and provide them with relief as far as possible. The statement comes just days after the GST Council reduced the compliance burden on smaller firms, allowing them to file quarterly returns.

Firms with a turnover of up to 5 crore were allowed to file quarterly tax returns, instead of paying taxes every month. This is expected to benefit 93% of taxpayers.

The Council also approved doing away with the reverse charge mechanism (with the exception of a few select groups) that would have adversely impacted small traders.

Under the reverse charge mechanism, entities registered under the GST that purchase goods from small, unregistered dealers have to pay a tax on behalf of the latter. This, while adding to the compliance burden of all involved, discourages purchases from unregistered dealers.

The decision was taken after the NDA government concluded that the measure will lead to hassles for traders without providing commensurate revenue gains.

The Council is also holding a special meet on 4 August to address concerns of the micro, small and medium enterprises (MSMEs) related to all taxes, including direct and indirect taxes.

Goyal said the government’s special drive to address the concerns of MSMEs was unprecedented and comes on the diktat of the prime minister.

Goyal added that it is possible to expand the taxpayer base under the goods and services tax to 30 million from the existing 12 million.

There are an estimated 650,000 firms linked with trade, the Union minister said, adding that a 30-million taxpayer target was not impossible.

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