Nagpur: The much hyped Goods and Services Tax, being dubbed as the nation’s biggest tax reform is all set for a crash start in Nagpur as the official website for Goods and Services Tax (GST) registration faced link failure throughout the first half. After a brief respite, the website crashed completely around 3 pm, said tax practitioners grappling to make last minute registrations.
The government issued nearly 17 eleventh hour notifications in the last two days. Many from Nagpur came in the midnight with officials are yet to interpret the orders. The final rates were out only on June 28, and firms are still grappling to locate the quantum of tax applicable to their business. The lengthy document has to be scanned to locate the rates as per chapter numbers.
So far, only Central government has issued the notification on rates. With the tax to be levied by the state also, the orders from Maharashtra Government’s side is still awaited.
Tax professionals in the city feel GST would unleash a reign of chaos. A large-section of firms brought under the tax ambit are yet to get registered. They may be left in a limbo from July 1, they say.
“Migration from Central excise, service tax or state’s value added tax (VAT) to GST was easy. But the GST regime has also created new categories of businesses which need to get a registration too. The window for such assesses was opened only on June 25, leaving little time for them to get registered,” said Julfesh Shah, a chartered accountant from the city.
“The website was not working till the first half. A strip was displayed reading ‘the link could not be established with the Central Board of Direct Taxes (CBDT)’. The link was required to feed the permanent account numbers (PAN) for GST registration,” said Ashok Chandak, an indirect tax practitioner and former president of Institute of Chartered Accountants of India (ICAI) and added that section 24 of the Central GST Act lists nearly a dozen businesses not covered under any old tax law previously.
“The biggest confusion will be on the method of accounting sales. Under the Income Tax laws, sales are counted when a bill is registered. GST accounts any supply as sale. So, even samples sent for approval can attract GST. A number of businesses operate through consignment agents. The agents hold the goods for selling it to a third party. There are doubts if even such transfers will be taken as taxable,” said BC Bhartia, a chartered accountant and national president of Confederation of All India Traders (CAIT).
“Locating the tax in the notification is another mammoth tax. The items are placed in chapters classified on generic basis. So, a raincoat maker will have to search the rates applicable probably in a long list of plastic goods,” said Bhartia.
The draft rates were issued long back with final notification out only on June 28, said sources.
“I am so far only relying on social media messages and grapevine on the rates. I cannot be sure before reading the fine print of the order,” said Nitesh Darvekar, a supplier of medial diagnostic equipment.
“There is not much confusion regarding foodgrains which are exempted unless sold under a registered brand. Several traders who sell foodgrains under brand name or trade marks which are not registered have declared that their items will not attract any tax. Only those having a registered trademark or brand name will have to pay GST,” said Pratap Motwani, secretary of The Itwari Grain and Seeds Merchants Association.
Builders say there is ambiguity on taxing the deals for which part payment has been done before GST. “If the balance is paid later, there is no clarity whether it would be still covered under old VAT and service tax regime, or GST. If at all GST is payable should it be on the entire amount or the balance paid after June 30,” said Tejinder Singh Renu, a realtor and secretary of Vidarbha Taxpayers Association (VTA).
Contractors say clarification is needed on aspects related to input tax credit for works contracts.