How the Govt. slowly diverted from KISS principle for GST due to amendments and tips to tackle them.

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How the Govt. slowly diverted from KISS principle for GST due to amendments and tips to tackle them.
Jan, 2021
By Vikash Dhanania
Resource Audit            

Namaskar!

The vision of the Govt. while introducing GST was to simplify the Tax system in the country.

But what subsequently happened with GST can be termed anything but simple!

As mentioned in the article in Times of India by Captain GR Gopinath, the Ministry officials should be reminded of the KISS principle again which is the acronym for Keep It Simple, Stupid!

This principle is attributed to a Lockheed aircraft Engineer Kelly Johnson who urged aircraft Engineers to keep the design so simple that even a stupid person can repair aircrafts on the combat field.

Where and how did it start?

GST started with the primary goal, and that is that it will provide relaxation to the businessman from mental retardation due to taxation. He will more concentrate on his business and contribute to nation-building.

But with every passing month after the implementation of GST, we saw that the regular and voluminous amendments have made the businessman's life as well as the life GST Advisor and the Return Filer too cumbersome.

Now, we have numerous Tax slabs for different Businesses and specific rules and systems which encourage the prevalence of the Inspector-Raj system as Taxpayers are encouraged to approach officers to solve their issues.

 

Give me a chance to explain the reasons for my mistakes

Suspension of Registraiton merely on mismatch in return.

Our Constitution and that of almost every country talk about giving a chance to every accused to explain his/her side of the story.

But in GST, with effect from 22/12/2020, GST Officers are given the power under Rule 21A(2A) of CGST Rules 2017 to suspend the GST registration for Businesses who have a mere mismatch between the Data in GSTR 2A and 3B as well as GSTR 1 and GSTR 3B.

Now onwards, it becomes a common practice for GST Officer to give no option of explaining their side of the story.

Besides that, it will probably become a common practice for GST Officer to give no option to the businessman of explaining their side of the story.

Not only that, the officer has also been given extended 30 days window to conclude the proceeding, and till then, the businessman will not be able to do business as the generation of e way bill will also be stopped. Besides that, the infamy in the business community will also harm the prospect of the business.

Restricting 105% of eligible ITC in GSTR-2A

We saw the Govt. reducing the limit of ITC claimed from 20% to 10% and further 5% at the times of COVID-19.

When Businesses are facing harsh conditions because of the pandemic and were looking for relief from the Govt., what they received were more restrictions.

W.e.f 1st January 2021, the ITC claimed from your Business should not exceed 105% of the ITC corresponding to invoices uploaded and returns furnished.

With Effect From

Limit on ITC Availment

09/10/2019

120%

26/12/2019

110%

01/01/2021

105%

Exceeding this limit can result in your GST registration getting cancelled under Rule 21 of CGST Rules 2017, which stands exactly opposite to principles like KISS!

What can you do in situations like these?

No matter what we say, this is a Harsh reality that we face today!

We as Businessmen / women have to face and deal with it while we put in efforts to urge the Govt. to reduce the complexities and think about the initial goal of the Law.

These are some of the steps we think you should take Today:

Do Monthly Reconciliation using Reconciliation Software

Make sure the Data in GSTR 2A and 3B as well as in GSTR 1 and GSTR 3B is equal at all times, and there is no mismatch. So use Return Reconciliation Software like PRACHI.

Review Return Reconciliation Report every month

Ensure that you are notified as and when there is discrepancy between return like GSTR 1 / 2A / 3B etc.  or availed ITC in excess of prescribed limit. This report is also available from Tax Tech Software like PRACHI.

Avail Service of TaxTech Return Filer or GST Expert

Avail service of Tax Tech Return Filer or GST Expert so that you get immediate consultation and solution whenever there is a mismatch or notice so you can fix the issues.

Ratio Analysis

Make sure your Business does not cross the crucial ratios as discussed in GSTM which are termed as Red Flags by the Department and invite fines, notices and Audits.

Keep ITC Register, Back Up Document etc. Readily Available.

You have to keep the input register updated daily and give the flag as to when and which ITC is being taken or not. Not only that, but you also have to keep an account of the ITC reversal amount and its reason, along with the reference of the related document in the backup document.

 

 

With these Basic precautions, you can remain safe from issues as we wait for relief from the Govt.

If you are confused about the above-mentioned things in your Business and wish to make processes smooth, so your Business does not commit the mistake of mismatch;

Contact GST DOST and we will equip you with tools that will make you error-proof and give you an incomparable Peace of Mind in Business!!!

T: 90 8888 3000

E: kambuj@gstdost.com

www.askdost.com

Stay Safe and Stay Healthy

Team GST DOST