Reasons: Why Taxpayers Avoiding GST Returns Filing

Instead of all earlier claims of the government that the new indirect tax would make taxpayers be more responsible in paying taxes, the number of taxpayers filed the returns in the seven months reveal the very different story.

The total number of taxpayers has not crossed 70 lakh instead the registration for GSTN has touched one crore including 38 lakh new registrants and 64 lakh earlier indirect taxpayers who migrated to GST. From one crore registered taxpayers, approximately 18 lakh are registered under composition scheme, who need to file the quarterly returns.

As per the number provided by the GST Network’s CEO Prakash Kumar, total 63 lakh returns were furnished in July, 67 lakh in August, and 69 lakh in September months.
Furthermore, instead of increasing, the number started falling shortly. In October the total returns filed were 65 lakh, 64 lakh in November and consequently 63 lakh in December. Although, the final number for January has been not announced yet.

Still, 15-20 lakh registered taxpayers are not furnishing the GST returns. Experts have sorted many reasons behind not filing the returns instead of registered under GST. Prateek Jain, Leader, Indirect tax, PwC mentions, “Many taxpayers who migrated from the older systems to the GST regime may not have any business at all (even earlier), and hence they do not file returns.”

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Although, he confirms that the number of people not filing returns is big who comes in this category of not filing returns and the government will later watch the real reason for this. MS Mani, Senior Director, Indirect Taxes, Deloitte India, mentions “Under GST there is a concept of nil return where even if there are no sales in a month, the registered dealer has to file returns. Quite possibly, many dealers and businesses who think that they may not need to file a return if they have made no sales.”

The third reason can be, as per the experts, some taxpayers are very passive and file the returns late. Mani of Deloitte mentions that there are many traders and dealers who are frequently on the wait and watch mode to furnish the returns. He says, “In GST, there is no concept of revised returns, returns once filed is filed for good. So, these traders would be thinking that even if they delay it by a couple of months all they have to do is pay the interest and a fine of Rs 50 a day, a price they are ready to bear.”

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The GST Council, the authority of GST, has as well moderated the return filing rules, diminished the late penalty charges to Rs 50 per day from Rs. 100 per day (Rs 20 for nil return), and followingly prolonged the due dates sometimes, in the whole procedure to make it less burdensome, the seriousness of GST compliance floated somewhere. This also mentions the partial slowdown in filing the returns each month.

Another Chartered Accountants firm official mentions that in the starting phase of GST rollout, there was fear among the registered businesses and traders that if they will not file returns on time, they will not get a chance to file the returns next time. Although, after many modifications that fear just reduced among the businesses.