GST Reform and Dispute Resolution

The Prime Minister has announced a plan to reform the Goods and Services Tax (GST), with a draft shared with states to implement changes by Diwali. However, GST remains incomplete and faces challenges such as unpredictability and disputes over tax rates, exemptions, and input tax credits (ITC).

Current GST Issues

• Uncertainty in tax regulations, leading to disputes.
• Frequent investigations by multiple authorities, causing administrative burden.
• High volume of demand notices due to minor discrepancies in return filings.

Proposed Solutions

• Rationalizing the rate structure to reduce complexity and rate inversions.
• Expanding the tax base by including some petroleum products.
• Creating a national e-platform for live data on cases under investigation.
• Adopting a nuanced approach to compliance management.

Compliance Management Strategies

• Issuing periodic advisories to prevent non-compliance.
• Defining reasonable steps for taxpayers to prevent ITC-related disputes.
• Encouraging accurate and consistent return data from taxpayers.

Enhancing Dispute Resolution

• Instilling fairness and timeliness among officers handling disputes.
• Continuous training and re-skilling of officers in dispute resolution.
• Implementing an incentive structure to promote fair resolution of disputes.