'Won't Punish Genuine Mistakes', Promises Government Ahead of GST Rollout

The revenue secretary said most states had issued the necessary orders and others would do it by today when the GST Council meets. But Dr Adhia suggested that too much was being made of the preparations that small business needed to make, perhaps due to communication gaps.

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'Won't Punish Genuine Mistakes', Promises Government Ahead of GST Rollout

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Revenue Secretary Hasmukh Adhia, the man behind GST rollout, spoke to NDTV on the biggest tax reform

NEW DELHI:  As India makes the transition to the country's biggest tax reform from Saturday, July 1, Revenue Secretary Hasmukh Adhia told NDTV that all states would complete by today the formalities to switch to the Goods and Services Tax that replaces a maze of indirect taxes with an online-based system. He also assured the business community that they won't be harassed under the new tax regime and the government would not punish genuine mistakes made by businesses.

"No transition can be seamless but we will make it as seamless as possible. Let people be assured that there is no intention to harass if a genuine mistake is made...mistakes can be taken care of," Dr Adhia told NDTV in an exclusive interview on Thursday. He said the clause that penalises profiteering wasn't meant to be invoked against the vast majority of small businesses but only the big fish if they do not pass on the benefit of lower prices.

Prime Minister Narendra Modi will launch the new tax regime at a grand event in parliament's central hall in the presence of President Pranab Mukherjee on Friday midnight. The government has invited all political parties and chief ministers to the launch, but the Congress, Left and West Bengal chief minister Mamata Banerjee have declared they will boycott the function.

Much of the criticism against the roll-out of the single tax that replaces a bundle of indirect taxes imposed by the centre and the states has been that the business community was not prepared for the 1 July launch. Jittery traders have also expressed apprehensions that it would increase the paperwork that they need to do, pointing to three forms that they would need to fill every month; 36 in a year.

The revenue secretary said most states had issued the necessary orders and others would do it by today when the GST Council meets. But Dr Adhia suggested that too much was being made of the preparations that small business needed to make, perhaps due to communication gaps. Apart from registering themselves, he said traders weren't really supposed to complete any formality on 1 July. The first return that they will have to file will only be a month later, in August.

As for the criticism about multiple forms, Dr Adhia said it was probably a mistake to label the returns that traders have to file as three separate GST returns. "I wish we had called it one form, with three parts. That is what it is," he said.

All that small traders need to do is to file one monthly return, not three, at the end of the month, he said. The other two returns would be generated by the computer and only needed to be vetted by the trader concern to allow them to make corrections, if any.

This, the revenue secretary said, wasn't anything new for traders who were used to filing monthly returns in most states under the existing Value Added Tax system of states.

The official, however, defended the decision to have multiple tax slabs at 5, 12, 18 and 28 per cent to the attempt, saying this was necessary to ensure that the tax regime didn't burden the poor and yet did not lose revenue. But in the long run, as tax compliance goes up, he said the tax rates could come down.

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