The ongoing discussions within the Indian government on how best to implement GST has been fraught with complications. Individual states are reluctant to agree to a centralised system of collection and administration, despite Federal bodies attempting to allay fears by promising compensation to those who lose out financially in the short-term, and compromises on the tax bands have had to be met.
It was recently announced the new tax would take effect from 1st July this year, although many were sceptical about the likelihood of a system being ready in that time considering previously stated deadlines were scrapped on the same basis. And the government is yet to fully establish which differing rates apply to which goods/services.
Discussions on 5th and 6th March were meant to be a stepping-stone to a fuller picture of a GST-India, with the publication of draft legislation. It now looks like only more questions are being raised, this time about how complicated the filing process will be for GST-registered businesses. Ease of doing business seems to be taking a hit in favour of pushing through a tax regime that is supposed to propel India into the 21st century and bring it in line with other economic powerhouses. A potential 2,000 filings a year for businesses operating country-wide at least means the Revenue Service will be kept busy for the foreseeable future.
“Service providers in the banking, insurance, logistics, IT (information technology) & IT-enabled services and aviation sectors are operating under a single centralised registration of service tax at present. That means, at present, they have to file three service tax returns in one year. In GST era, they will have to file 61 returns per state, per year, after taking registration in each state in which they have presence,” the letter said.