NEW DELHI: The government on Thursday said GST has reduced the number of tax filings for businesses, while slashing the preparation, filing and tax payment time to 36 hours, which is almost a third of the 105 hours that were spent earlier, drawing a sharp response from companies and tax practitioners.
The claim made during a presentation to highlight the steps on ease of doing business was questioned, saying the numbers may not be in order. Besides, some company executives said this was more like a statement of intent at the moment as the filing process, which faced severe criticism in the initial months of rollout, is being revamped for simplification.
The department of industrial policy and promotion (DIPP), which is pushing for a further improvement in India’s ranking from the current 100, is highlighting easier tax payment rules, on the back of GST, along with quicker clearance for export and import consignments and a modern bankruptcy law as key achievements.
No of filings has doubled to 72 a month, 864 in a year
Sources said the calculations factored in an average filing time of 15 minutes per form. In the pre-GST days, large businesses were required to file four returns dealing with state VAT, central sales tax, Union excise duty and service tax. In contrast, all these have been compressed into one. The earlier process involved filing multiple times in a year and, in case of VAT, returns had to be submitted in every state where goods were sold.
Tax practitioners said in some cases, such as service providers, the compliance burden had actually grown after the introduction of GST. For instance, a telecom company, which had to file two service tax returns annually, is now required to file one return every month in each state that it operates in – translating into 36 filings a month if it has operations in every state and Union territory. If you treat GSTR 1 (initial filing) and GSTR 3B (final filing) as two filings, then the number doubled to 72 a month and 864 a year.
“While compliances, in general, have increased for service providers under GST, manufacturers have been on the beneficial leg with multiple returns under different laws earlier merging to returns under a single GST law,” said consulting firm EY’s partner Abhishek Jain.
Others said the time taken to file returns will only come down once the new forms are released. Harpreet Singh, indirect tax partner at KPMG in India, said, “We agree with the government in reduction of the compliances and filing of the number of returns unconditionally. As regards the time spent in doing GST compliance, we still agree with the claim but with some caveats. The time spent would reduce only if the format of the new GST return is released well in advance and the industry is given time to get accustomed to it.”