Sales tax department software bugs rile taxpayers


Nagpur: A futuristic online tax payment system introduced by the sales tax department is now facing technical hiccups. In May, the department that collects value added tax (VAT) had introduced a system through which it could calculate a dealers’ tax liablity on the basis of data provided. Maharshtra is supposed to be the first state to have such a mechanism for VAT collection. However, glitches in the system have ensured it has not been put in use yet.

Under this system, a dealers’ job is to simply provide data on sales and purchases during a month. Based on that, the system prepares a return and calculate the tax payable. This return will again go to the dealer for his consent.

The system is built in anticipation of the goods and services tax (GST) that is due to be implemented. At present though, there are issues with speed and it is difficult to upload data in the system. Problems have been reported in overall functioning of the software too with certain updates needed. The issues are expected to be settled within a fortnight. In the meantime, the department has extended the deadline for filing returns till July 31 as against May 31, said a senior official.

The new system does away with defects of the old and also makes it easier for the taxpayer. In VAT, there is a system of getting input credit on the basis of tax paid during the course of transactions. Suppose A is a seller of goods purchased from B, a wholesaler. The tax charged by B to A in his bill makes input credit for A and will propotionately reduce the latter’s liablity on selling the product. Under the new system, the department will be able to confirm quickly if the tax has actually been paid by B. The earlier system used to take two years after which the dealer claiming the input credit had to pay back the amount, said the official.

However, the technical snags have left the tax practioners peeved. Rajeev Damani, a chartered accountant, said, “it has also stopped registration of new dealers. This has hit those who want to get a VAT regisration for starting new business. The department should have done sufficient trial runs before finally introducing the new software,” he said.

Ashok Chandak, former president of Institute of Chartered Accountants of India (ICAI), said even as the system has its own advantages it appears to have been launched without enough groundwork. It also also places the onus on the dealer to pay back the input credit if his seller has not paid the tax. Even as this is aimed to prevent bogus transactions to earn input credit, in genuine cases the tax should be only levied from the vendor if the default is from his side, said Chandak.

In a Nutshell

* Sales tax department’s new software enables calculation of tax liablity by department

* It can also keep track on fake purchases shown to claim tax credit

* Experts say dealers are likely to be penalized even in genuine cases

* Tax professionals say stalemate will increase work pressure when system is restarted

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