Admin[By Shaleen Shah (Partner), VNCA]
The revolution promised by GST might not be all that rosy. The Centre has yielded to requirement of States to continue with the age old permit system while transporting goods. Though the paper permit may become an e-permit, those transporting goods within or outside states will still have to queue up at border checkposts where their e-permits will be checked.
The GST Council has finalised a four-tier GST tax structure of 5 per cent, 12 per cent, 18 per cent and 28 per cent, with lower rates for essential items and the highest for luxury and de-merit goods. The exact rates applicable to particular goods and services have not been finalized and this will likely happen over the next few weeks. However, recently it is being heard, and it is surprising that it is not adequately highlighted, the final GST rates are expected to be in the range of a sum total of the current tax rates (Excise, VAT & Entry Tax.) If that is true, a mineral water bottle that currently attracts 12% excise duty and 15% VAT in Gujarat, will be taxable at 28% GST. This is not what everyone is expecting.
At present, service providers benefit from a single centralized registration system. GST will require service providers to register in every state where they operate. A normal taxpayer will be required to file three monthly returns and one annual return i.e. a total of 37 returns per state, per year. There is also this concept in GST of of input credit matching. Compliance costs are set to rise.
Service providers in the Banking, Insurance, Logistics, IT & ITES and Aviation sectors are operating under a single Centralised registration of Service Tax at present. That means, at present, they have to file 3 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. So, a major Bank like SBI, which has branches in all 35 States / U.T.s, will end up filing over 2000 (61*35) Returns annually. This does not seem to be in the spirit of Ease of doing business.
