Bumpy ride awaits Goods and Services Tax pursuit
The Goods and Services Tax (GST) bill might have got the Parliament’s nod, but the overall ecosystem is nowhere close to adopting the new tax regime considering its likely implementation from July 1, 2017.
In the Pune region, comprising Pune, Solapur and Kolhapur districts, and Goa, there are 11 lakh entities that pay service tax and central excise currently. Of these, only 86,000 (7.8%) have been issued IDs by the service tax commissionerate. Worst, only 21,500 of these have migrated their data to the GST network.
As per the current deadline, companies are required to migrate to the GST network before April 30, 2017. “Registering before the date will allow entities to carry forward their input tax credit, if any, which they can claim as a set-off against the GST they will have to pay,” N Shridhar, commissioner, service tax, Pune, said. Under the GST, companies with an annual aggregate turnover of Rs 20 lakh will have to pay the tax. In the current service tax regime, only those with Rs 10 lakh annual turnover are paying the tax.
So what is stopping the companies from migrating to the GST network. “Possibly many entities are waiting for the actual passage of the bill in their respective states,” Shridhar said.
Meanwhile, the commissionerate has opened GST Service Kendras to assist firms with the migration and is also spreading the word through outdoor advertising. “The scale of the change required is under-appreciated today. Moreover, not enough ground work has been done. It calls for a massive change,” Sanjay Phadke of Pune-based Vayana Network, one of the 34 GST Suvidha providers, said.
It is also felt that there will be some pull-back in the economy before things are streamlined and the benefits begin to accrue. One of the reason is because of the change in the threshold limit to Rs 20 lakh. Experts feel that eventually everyone will come around to be a part of the system in order to stay competitive.