With just 15 days remaining for the rollout of a new tax regime, experts have raised a red flag over the challenges faced by the services sector in moving to the Goods and Services Tax system.
The key issue is that the GST Network is yet to begin accepting fresh registrations. Till now, the GSTN portal, which was open for a month in April and again for 15 days in June, has only been accepting requests for migration from the current regime to the GST system.
Under the current tax system, a service company with multiple offices across India needs to take one service registration number. However, under the GST system, it will be required to get registration done in each State where it has operations.
'A very cumbersome exercise'
“All service companies have been made to undergo a very cumbersome exercise of doing the registration process all over again, in relation to their branch registrations,” Mahesh Jaising, partner, indirect tax at BMR & Associates LLP said. “The key problem in hand is that the IT system and the GSTN system are not accepting new registrations during the current window opened for registration — it is currently confined only to migration.”
“So, all the services companies having pan-India operations, which typically includes sectors like technology, advertising, consulting, logistics, etc, are faced with this situation of not having State-level GSTIN (Goods and Services Tax Identification Number), with just over two weeks to go,” Mr. Jaising explained.
While the government has indicated that the portal shall be open for fresh registration before July 1, with just 15 days remaining it may lead to a lot of confusion and rush towards the deadline, experts said.
“Right now, the GSTN is allowing provisional registration only for companies with VAT and service tax registration,” a tax expert told The Hindu on the condition of anonymity. “Hence, we have seen that the migration of VAT dealers has largely gone off well as compare to the service sector.”
Will govt. do some relaxation?
“Services, especially software companies, need to do business in several States,” the expert noted. “If they are not registered in those States, then how will they get the GST number for their invoices? Maybe the government will do some relaxation by saying the GST number is not needed on the invoice, but only needed by the date of filing of returns.”
For any person to migrate to GST, he or she is required to be registered under the current law either as a service provider or as a dealer. Based on that, they are given a user name and password, using which they can log on to the GSTN website to register under the new regime and upload documents.
Bhavesh Chandra, senior consultant at Taxmann, one of the 34 registered GST Suvidha Providers, said it was not a big issue. “Even if fresh applications are accepted from July 1 onwards, it will create a problem only in that the invoices will be printed without the GST number… It’s a one-time pain.”
MS Mani, Senior Director, Deloitte Haskins & Sells, said the registration process was not complicated, and if the software worked, then it happened quickly.