Simplifying GST: If ‘Make in India’ has to succeed, ease of business must improve

Inspector Raj in India started at the time of Indira Gandhi to ensure tax compliance. For fifty years it did not happen. Now comes digital compliance. Will it boost taxes or manufacturing?

In search of a decorative ceiling lamp, I recently visited a small retailer in New Delhi whose manufacturing unit was in Noida. It was a Sunday evening and the owner and his wife were manning the shop with a couple of shop assistants.

4 GST entries for 1 sale?

After we had completed our purchases, the owner took an enormously long time to make out the bill though we had purchased just one item worth a little over Rs 5400. When I asked him about the delay, he said he was reducing the stocks in the GST ledger in the computer. Since the last date for filing August returns was close, I did not object. Surprisingly, he then proceeded by hand (not computer) to make out two bills. One with 14 per cent CGST, 14 per cent SGST for the fitting which was supposedly a luxury item and one with 6 per cent CGST , 6 per cent SGST on the electric bulb. His bill book had three separate sales tax categories, one for state, one IGST for central and one for international/inter -state which meant the equivalent of three separate entries.

What worried me was not the high GST on a 20” powder coated aluminum dome. True 28 per cent GST was high on the aluminum fixture — a luxury product that was made in India by a small-scale unit. But more worrying was the amount of paperwork it seems to have generated. And the strange behavior of the business owner completing his GSTN ledger before dispensing off with a waiting customer. True, excise duty has gone, but is GST and its paperwork equally and more crippling? Why should a manufacturer have to make four separate tax entries to sell one item?

I will get into the details of why the current credit and debit system of taxes is time consuming. Why billing is being done by hand despite computers in the subsequent posts. But now let us talk of another incident that shows how difficult the things really are at the ground level.

A multinational white goods seller sends two bills to ensure error free entries

Last week the PCB of our washing machine started malfunctioning. A phone call to the company call center made them send a technician who replaced the PCB and a connector within 24 hours. The technician made out a bill by hand of just Rs 4895 which included four entries. Two for the parts changed, one for the service charge and one for the scaling detergent that is a consumable.

The next day the technician came back with the computerised bill (pakka bill). This bill was of the same value as the previous receipt, but had the GST entries in place. Obviously, the accounting was too complicated and the accounting heads too many for the service engineer to make it on site. Besides the stock deduction must be taking place at the time of billing in the office as mandated by the law.

This clearly showed that even dealers of multinational corporations with adequate resources and software support are stumped at the GST accounting. Clearly much work is needed to simplify the process. Though it is not easy to make GSTN accounting simple considering the multiple slabs and the co-relation of sales with purchases, it is not impossible either. Talking to a wide range of people in different businesses, it appears that the ease of GSTN implementation is the single largest cause of concern across the spectrum.

Note: We will keep talking in this space every day on the issues that are hurting ‘Make in India’ and GST compliance. On the need to simplify business practices and the need to make tax payment easy.

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One Reply to “Simplifying GST: If ‘Make in India’ has to succeed, ease of business must improve”

  1. Badal Datta says:

    any man can mistake in doing the work, even finance mister also,
    but why we will not be able rectify our mistake in time of submission of GS T Return – 3B as well as next forms.
    He should think about it.. All the india people are not well expert like Finance Minister and his surrounding amla

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