The proposed rule of keeping details of records of sales and filling them thrice a month under the Goods and Services Tax (GST), will increase paperwork for traders. As the most awaited tax law is likely to be implemented from next month, experts are spending sleepless nights explaining the intricate details of the GST to their clients.
“The rules under GST have prescribed for maintenance of records of detailed paperwork. This is highly complex and will cause immense problems and hardships to assess, especially for small traders and businessmen,” Devesh Sachdev, CEO, Fusion Microfinance, told The Sunday Guardian.
Explaining the complexities of GST, Sachdev said: “Under GST rules, detailed records are to be kept not only by suppliers of goods or services, but also by intermediaries such as warehouse owners, transporters and agents. In addition, they also have to track stocks given as free samples or gifts. Even corporate houses have to file financial reports nearly thrice a month, which will increase the paperwork to a great extent.”
The problem for small traders is not limited to managing the increased paperwork; they have to pay more taxes under the GST regime and that is challenging for them. “Small traders are exempted from paying excise duty. With the implementation of GST, they would be required to pay full rate of GST, which may make them face stiff competition from other industry leaders. In terms of tax cost involved, the small scale service sector is likely to face an increased tax burden under GST, against the present effective rate of 15%,” Sachdev added.
Another paradigm shift in the GST regime would be its new compliance mechanism. Every trader-cum-taxpayer under GST will have to update electronically on a monthly basis for every state they operate in at the transaction level, with a single portal called the GST Network (GSTN).
According to the GST network, about 80,00,000 PAN-linked taxpayers (the expected GST community) will be tracked electronically across the value chain through the GST portal and this will effectively plug tax leakages within the GST chain and will contribute to better compliance.
Amit Jain, a Delhi-based chartered accountant, said: “For services industries like banking, telecom and others who dealt with a single Central levy of service tax from a compliance perspective, will now need to deal with multiple state registrations in the proposed construct, which will be painful and expensive for these sectors.”
“The form of compliance reporting will be burdensome for a majority of stakeholders. It will be tough in the initial phase, more so for the smaller players, but will protect revenues,” Jain said.