GST protest: Chennai downs shutters. With just over a week to go for the July 1 deadline to rollout GST, system providers for the new regime to function smoothly say they are not ready yet. Third party GST Suvidha Providers claim only piecemeal implementation is possible by deadline.
Hoping for a smooth ride for companies under the Goods and Services Tax regime, GST Suvidha Providers (GSPs) have said that the two-month extension was expected as software for filing tax returns or application progamme interfaces (APIs) would only be available by the end of June.
Once the APIs are available, it would take them a few weeks for testing the software.
“On the GSP front, we have initiated the audit process as per the agreement with Goods and Services Tax Network (GSTN), but the services will be available a few weeks later since it has to work in coordination with the GSTN roadmap,” Bharat Goenka, Managing Director of Tally Solutions, said.
“GSTN has its roadmap for release of APIs and we continue to believe that time is too short for testing. We will be ensuring that we do not make hasty product releases in the market but only release robust solutions,” he said.
APIs are a set of tools on which the GSPs will develop applications for accounting software, enterprise resource planning (ERP), filing and billing that will help businesses comply with the new indirect tax regime.
The delay to release the APIs has been because the Rules were still in a fluid state and the GST Council approved five of them in its recent meeting on June 18. The five Rules approved relate to advance ruling, appeal and revision, assessment, fund settlement and anti-profiteering.
“The Rules remain fluid and also continue to have ambiguities which we hope and believe will get ironed out over time,” Goenka said.
Saket Agarwal, Global CEO of Spice Digital, said that over the last couple of weeks there have been quite a few changes. “For GSPs these have come up as a major deterrent in their preparedness. For us the focus has been on a scheme that will not only be scalable but also accommodate every change.”
He said that his GSP will be ready for the GST implementation in the coming month.
The Council has allowed businesses a relaxation of time for the first two months (July-August) for filing their returns. They would only need to submit a simple declaration initially, and would have time to furnish the exact “invoice-by-invoice data” in September.
“While there is definitely compliance relief, the testing of the APIs has been something that was a point of concern for all the GSPs. We are hopeful that the road towards filing of returns is not going to be bumpy one,” Agarwal said.
Some GSPs have already begun testing on the basis of Rules and fitment of goods available to them as of now.
Vinod Tambi, Co-founder and COO, Excellon Software, said, “Whatever is available to us at this point in terms of GST Rules and taxes, we are already testing. We expect next set of data for finalisation of our system to test with.”
With the extension given by the government to file returns till September, there should be enough time to make the systems ready, he said.
Nishank Goyal, CEO, Masters India, said, “The extended time line for return filing will allow us to add more functionalities and features to the product.”
Sugal and Damani Utility Services, which operates under the brand name Payworld, said that the roll-out of GST will increase the compliance requirements manifold and the GSPs need to ensure scalability.
“When GST goes live, the compliance requirement is going to increase drastically. With the roll-out scheduled on time, as a GSP, our IT systems should be enabled to handle as many forms as we receive,” Praveen Dhabhai, COO of Payworld, said.
Along with GSPs, Application Service Providers (ASPs) have also said that they would need more time to prepare a fully functional solution.
While GSPs help businesses in uploading invoices and filing returns, ASPs actually help in converting the raw sales and purchase data of traders into GST returns.
“Our solution is not ready, we will need more time as the GSTN has to make more APIs available for a fully functional solution,” said Yogesh Huja, Founder of Freedom Desi.
“It is unfortunate that when July 1 was the deadline for filing returns, GSTN is releasing APIs on June 29. If the APIs were released on time there shouldn’t have been any requirement of extension,” he said. However, he felt that two months would give them enough time to ensure a leak-proof solution.
Meanwhile, with less than 10 days to go for the biggest indirect tax reform to take effect, retailers are rushing to clear their stocks by offering huge discounts ranging from around 30 per cent to 60 per cent.
Retailers said the “clearance sale” was being undertaken to liquidate their old stocks since they were unlikely to get input credit on the products once the new Goods and Services (GST) regime kicks in. Also, GST rates, compared to the existing VAT, would be higher.
“Instead of paying that extra amount to the government, which is a loss, we have put up a sale to liquidate these stocks,” Ashish Gupta, Managing Partner at Vijay Sales, said.
Vijay Sales is an electronics goods retailer with many stores in the national capital. “We are looking at July to be a lean month now. The migration to GST will be happening and because of the price increase, there will be a setback for at least some time to come,” he added.
Players in the field of apparels are also following the same path.
“There are going to be different tax brackets. For apparels, it is five per cent for products below Rs 999 and 12 per cent above that range. We are working towards adjusting to the GST. It will be a teasing stage initially,” said Farida Mahabat, Marketing Head of fashion retail store Splash India.
The GST Council has levied tax on textiles, such as yarn and fabric cotton at the lower slab of 5 per cent, apparels up to Rs 1,000 per piece at 5 per cent while costlier readymade garments would attract 12 per cent rate.
“It will take around a month for everybody to actually understand how the GST system is going to work. Once things settle, we will get an idea of the price increase,” she added.
According to Harkirat Singh, Managing Director of Woodland: “The percentage in our category has come as 18 per cent, since our shoes are normally in the price range of Rs 2,000 and above. If we compare 18 per cent to the taxation before, that is VAT (value added tax) — which averages at about 12 per cent all over the country — the GST rate would be higher.”
Woodland is offering discounts up to 40 per cent. “But since the GST has other parts as well, where you get input credits, the difference won’t be too much. It might increase by approximately one per cent or so, which will be absorbed by the company,” Singh said.
The GST tax rate on footwear costing more than Rs 500 has been fixed by the council at 18 per cent. At present, footwear less than Rs 500 is taxed at 9.5 per cent.
Gupta added: “The prices of goods will increase because, first, the brands will increase their prices. Secondly, the discounts offered now will not be given at that time. So obviously, there is a huge rush of customers right now.”
Singh, however, said there won’t be too much of a difference. “The prices are not really going to change. It’s only the customer’s perception that the prices will go up later,” Singh asserted. (IANS)