Praveen Khandelwal has been a vociferous evangelist of trade tax reform, right since the days when VAT replaced sales tax. Himself a trader based in New Delhi, he speaks for his ilk from the frontlines, and as general secretary, has helped build the Confederation of AllIndia Traders (CAIT) into a well-oiled lobbying forum for the small merchant.
GST will be a game-changer for the trading community, Khandelwal asserts, but calls for a simplified and rational tax structure that encourages voluntary compliance. “In its current form GST is cohesive and promotes transparency and accountability.” But the major challenge, he says, will come from implementation and compliance since the new regime is entirely based on e-compliance. To this end CAIT is going all out to educate the trading community and help in its seamless adoption.
While speaking to Sourcing Hardware in between intense meetings and seminars, he called for a regime that’s fair to traders and which recognises the yeoman’s service they have been providing to the country.
At CAIT, we have always been in favour of a single tax, single authority, uniform tax rates, and uniform law across the country under GST, including definitions and charging sections. India should be converted into a single market by eliminating all kinds of road permits, entry forms or other forms currently being levied on inter-state transactions. There should be a seamless input tax credit mechanism under which the honest transactions should not be penalised for the fault of others, and a time-bound refund mechanism should be evolved so that the capital of traders is not held up with the departments. Further, the treatment of stock available with traders on the day prior to implementation of GSTneeds greater attention, and all taxes paid by traders on the stock should attract input credit.
We are of the view that the term ‘supply’ replacing ‘sale’ and ‘purchase’ should not be done in a discretionary manner, and that provision of ‘invalid return’ and ‘reverse charge’ will result in utter chaos and needs a holistic view. Also, the period of depositing tax and filing of returns may be made quarterly instead of monthly, since most of the traders do business on credit of not less than 3-4 months, and under such circumstances monthly returns will oblige them to pay tax from their pocket, which is unjustified. Traders are one of the important carriers of GST since they play the role of tax collector for the government. Therefore, GST has wide ramifications on the trading community, since it will have far-reaching implications on their business.
The first three years from the date of implementation of GST should be declared as ‘transition period’ and penal or other similar action may not be taken against any trader for clerical or procedural mistakes. The traders should be given the status of ‘tax collector’ and they should be suitably reimbursed in lieu of this service. Also, the tax practitioners working with dealers under the current VAT regime should be allowed to audit and prepare returns under GST law, and as such suitable provisions may be made under Section 42 and 86 of the proposed Model GST Bill.
As an association related to traders, we feel that a calibrated approach is needed to define higher tax rate – sin rate – and a careful approach is needed for placement of items under this tax slab. The same approach is also required for exempted goods category and zero rate category items.
While digital compliance is key to the proposed taxation system, adoption of computer technology in the non-corporate sector is so far very low. Thus, there is a need to encourage them to adopt technology and on the other hand to facilitate them. An integration mechanism is needed for filing of returns through GST Suvidha Provider (GSP) or Application Software Provider (ASP).
CAIT and Bengaluru-based accounting software firm Tally Solutions have recently signed a memorandum of understanding (MoU). This collaboration aims to raise awareness of the procedural compliance under the new taxation system and how traders can embrace technology for easy compliance of GST. We will educate and train the trading community on implications of the new law on their respective businesses, and help members understand the importance of technology adoption in this new era.
Accordingly, CAIT and Tally Solutions will launch a nationwide campaign to help traders understand the impact of GST on their businesses. The first such campaign would be launched in tier 1 and tier 2 cities, gradually spanning to cover even the smallest hubs. In this first phase, CAIT and Tally will hold 33 conferences on
GST in various states till 20th December. Besides Mumbai, CAIT will hold conferences in New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Kanpur, Jaipur, Nagpur, Rourkela, Bhuvneshwar, Ranchi, Raipur, Guwahati, Hyderabad, Bhopal, Indore, Chandigarh, Pune, Kochi, etc. The idea is to train master trainers
in every state, who in turn will train traders in their respective states, down to the smallest hubs