One year of GST: Ten key challenges awaiting the government in the second year of roll out

The first year under the Goods and Services Tax (GST) regime was a roller coaster ride. But those challenges did not stop its progress. In the second year, the government will have to meet a lot of expectations. Enlisted are points that define the possible tasks at hand that require focus:

Simplification of return filling with no compromise: The single-return model is awaited by all, as this for sure will reduce the time and resources engaged in filing multiple returns and accumulating a lot of needed data. With the new model of only one return per month, the department will have to streamline a parallel mechanism to ensure there is no information that is missed out that may lead to manipulations and leakages.

Technological challenges: Keeping abreast with the technological demands will always be a challenge. With the improvement in the economy, an increase in the number of checkpoints to avoid tax evasion, and awareness among taxpayers, the number of people using the portals will see a rising trend. Increasing the portal bandwidth from time to time to ensure that there are no breakdowns or crashes and keeping it user-friendly will surely keep the GSTN on track. It is after all not just the technology that matters as the availability and upkeep of manpower and finances will also have to be taken care of.

Little chances of further relaxations: To facilitate ‘ease of doing business', the government had to allow certain relaxations to ensure compliance; these included an extension of the return filing due dates, waiver of late fees for delayed filings, etc. The government had taken these measures to accommodate the participation of as many taxpayers as possible, but one can’t expect this to become a norm going forward. In the future, the government will have to ensure that all businesses comply with established conditions and timelines. This is particularly important to make sure the businesses that adhere to the timelines are not demotivated

Place of supply and its provisions: GST being a destination based tax may lead to a lot of queries and litigations between states around 'place of supply'. The department will have to be proactive in making sure that there is room for no ambiguity in the place of supply provisions.

One year of GST: Ten key challenges awaiting the government in the second year of roll out

Representational image. PIB.

Advancement in EWB mechanism - A tough game to maintain: The E-Way Bill has helped to smoothen the movement of goods so far. Real-time tracking of goods transported under the EWB seems to be in the pipe for the department. However, this will increase the burden on servers and will also enable defaulters to track their target locations. To add on to this, the checking of e-way bills only once in the entire journey may also facilitate these defaulters to plan their mishaps wisely.

Future of petrol/diesel: Increasing prices of petrol and diesel have been a matter of concern consistently. The debate of including or excluding them from GST will soon take another perspective if prices keep increasing at their current pace. A clear-cut decision from the officials to stabilise the prices is eagerly expected. Deciding on whether to bring petrol/diesel//aviation turbine fuel/natural gas under GST, and getting all states to agree to that, will be a daunting task.

Anywhere, anytime access only to the supplier: The supplier can upload invoices on the portal anytime; this will help the recipient of supply to claim credit rightly. But what about situations when there is a delay from the supplier? With GSTR-2 suspended, and while the recently recommended return filing system takes off before this year ends, the department will need to design a mechanism that will allow the recipient of supply to upload those documents that were not previously disclosed in the supplier’s data, so that they can claim eligible input tax credit on time.


Strict vigil by the department in the future: The department is heading to a stricter enforcement of the GST law. The analysis and audit by the department may trigger notices and orders to taxpayers. Like the prior days, these notices too will create a lot of unrest among people. Handling the situation then may turn challenging. A window period to rectify mistakes, after clarifications and notifications are issued, may hopefully help cool the issue.

Reverse charge mechanism and its complexities: There are a lot of legal issues surrounding the reverse charge mechanism concept. The government has been wise enough to delay its enforcement till 30 September 2018 to fill all the legal gaps and lapses.

Multiple advance authority rulings at the state level: Currently, different states pass advance rulings based on the need of the situation. Setting up a centralised authority of advance ruling with the right blend of officials is needed to ensure that the decisions so taken by the states are monitored, and are in the best interest of all parties. Setting up this authority will not be an easy task Approvals, selections, the framing of boundaries, among other things, will take time. Further, there could be a possible conflict of interest between the Centre and the states.

(The author is founder and CEO, ClearTax)

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Updated Date: Jul 12, 2018 10:11:04 IST

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