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Are businesses really facing problem or it's just another political stunt with GST?

CA Ritesh Gyanchandani , Last updated: 09 October 2017  
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Heard lot of noise on tax burden, compliance cost, business disruption etc. but data provided by govt. does not support the compliant.

July stats from Government:

40% pay nil tax:

In July, 54 lakhs business filed the return out of which 40% claimed 'nil' tax liability and paid no tax. In other words, around 22 lakhs businesses did not even pay a single rupee GST.

Remaining 60% many did not have cash liability over Rs. 33,000:

Of the remaining 60% or 32 lakhs businesses  many did not have a cash liability as they opted to use the credits available for service tax or excise that they had paid before GST kicked in on July 1. Out of 32 lakhs close to 70% had a tax liability between Rs. 0 - 33,000 in taxes. On the other hand, just 3% which is just over 10,000 companies accounted for almost 2/3 of the GST mopped up by the Govt. in July.

Current Registered buyers and their position:

Currently close to 1 crore businesses and service providers are registered, 72 lakhs migrated from previous tax regime while 25-26 lakh new taxpayers have added as said by Finance Minister Arun Jaitley. Also added that around 94-95% of the collection is from large assessees or those with a turnover of over Rs 1.5 crore, who make up around 10% of the registered base of taxpayers.  

Blame and Politics:

"Everyone is simply seeking exemptions but most are not paying taxes," said an official. The government's move to usher in GST has faced criticism with political parties blaming poor implementation for the problems being faced by businesses.

Reason behind criticism:

The government, while fixing the problems has said that a part of the reason for the criticism is due to the fact that many entities which were earlier out of the net or evading taxes are now being forced to pay up.

Low tax collections initially but hoping for better future which could reduce rates:

Although tax collections are lower from a majority of the taxpayers, the government is hoping that GST will help widen the base and create space in the future to reduce tax rate.

Concept paper on tailoring of rates:

Jaitley said at Friday's meeting that GST Council also decided on how rates will be tweaked in the future. "As revenue increases, and depending on the revenue neutrality situation in the future, rates will be tailored according to the concept paper (that was cleared)," he said. 

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