Small and medium enterprises may be allowed file returns quarterly as against monthly now
The Goods and Services Tax (GST) Council, the decision-making body for the new unified indirect tax, is likely to announce a slew of reliefs including quarterly return filing for small businesses and sops to exporters in its meeting today.
It may enable exporters to utilise benefits and incentives derived from foreign trade policy to pay Integrated GST (IGST), push-back of reverse charge mechanism (RCM) among relaxations to ward off growing resentment among indirect taxpayers.
Isaac Thomas, finance minister of Kerala, told DNA Money that the issues likely to dominate the discussion at Friday's meeting include how to ease the compliance burden of the small and medium enterprise (SME) sector, technical glitches on return filing platform of GST Network (GSTN) and resolution of exporter's liquidity problem.
He said the government was actively considering relaxing return filing norms for SME by allowing them to file on a quarterly basis instead of every month. The SME sector has been grappling with working capital issues due to the monthly return filing rule under the GST regime, which requires them to pay taxes upfront and claim a refund later.
"That (quarterly returns filing for SMEs) could also be considered because there are very serious problems, it is not light. Everyday resentment is mounting, it is not dying down," said Thomas.
The Kerala minister said the Council was also looking at a few measures to address the liquidity issues being faced by exporters. Though, he did not specify in what form the reliefs may come.
A source in the know of deliberations in the North Block said one of the ways in which exporters' liquidity concerns could be addressed is that "they could be allowed to pay IGST from the benefits and incentives that they get from foreign trade policy".
M S Mani, senior director with consulting firm Deloitte India, said the government would have to seriously work on swifter refund mechanism to quieten the shrill voices against the shoddy implementation of GST. He said refund platform on the GSTN had not yet been enabled.
"It is not a minor challenge which is going to go away in a hurry. If they (Council) are going for a refund model and not exemption (for exporters) then the refunds have to come in quick. Today, the refund platform on the GSTN is not yet enabled. So, even if somebody wants to file a refund application, the person cannot file for it," he said.
Recently, the government allowed small exporters to supply items on the basis of a letter of undertaking (LUT) without producing a bond and a bank guarantee. It exempted those who were prosecuted for evading taxes above Rs 2.5 crore from availing the LUT. This move was expected to improve cash flows of small exporters.
The Council may also go for deferment of RCM, which requires the recipient of goods and services to pay the GST which was otherwise being paid by the supplier. RCM was applicable when a registered entity was dealing with an unregistered unit.
The indirect tax body may also reportedly reopen registration for composition scheme, under which businesses with a turnover below Rs75 were allowed to pay concessional tax rate, for the third time. Besides these reliefs, the Council may also review the functioning of the GSTN, the IT backbone for the new tax, and its robustness in handling applications on its platform. Taxpayers have been grappling with filling various IT return forms and uploading invoices on the GSTN website even as the government has postponed the date for filing returns for the July to later this month.
WHAT IS EXPECTED
- Small and medium enterprises may be allowed file returns quarterly as against monthly now
- Exporters may be enabled to utilise benefits derived from foreign trade policy to pay IGST
- The Council was also looking at a few measures to address the liquidity issues being faced by exporters
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