States to bear cost of filing tax returns, payments under GST

States will foot the bill of Rs50-60 as they try to shield traders from high costs, ensure a smooth transition to new tax regime

Every tax payment and return filing under the goods and services tax (GST) regime will cost around Rs.50-60, but traders will not have to bear this cost.

Instead, the states will bear this cost as they try to protect the trader base from higher costs and ensure a smooth transition to the GST regime.

Under GST, the entire dealer registration, tax payment, tax return filing and refund will be online and administered by the GST Network (GSTN).

GSTN was set up in 2013 as a not-for-profit firm and was envisaged as the technology backbone for GST. As part of its revenue model and to sustain its operations, GSTN will recover these costs by levying a fee for transactions undertaken on the network.

Under GST, every trader will be required to file a monthly return as well as an annual return. Separately, they will need to file a return each for purchases and supplies. Small traders, however, may only require to file returns on a quarterly basis.

“For tax payment and the corresponding return filed, the cost comes to around Rs.50-60. Ideally, traders could have paid this directly to GSTN. But states have said they will pay this amount for the traders registered in their states,” said a person familiar with the development.

The cost per transaction has been arrived at taking into account the costs that the network expects to incur in the coming months. GSTN had awarded a Rs.1,380 crore contract to technology firm Infosys Ltd last year for developing the GST network and maintaining it for five years. Of this, around Rs.400 crore will have to be paid to Infosys towards hardware import costs in the next few months. GSTN will take a working capital loan from banks to meet its costs in the near term.

“Right now, the government is not charging anything from traders for tax payments and return filing as this is the sovereign function of the government. But, under GST, the tax payment and return filing are being administered by a private company GSTN,” said S.D. Majumder, former chairman of the Central Board of Excise and Customs.

GST will replace the multiple indirect taxes levied by the centre and the states, including excise duty, service tax, value added tax, luxury tax and entertainment tax.

GST aims to remove barriers across states and ensure seamless movement of goods across India.

According to GSTN estimates, around eight million traders will register under GST. All traders will need a GST ID—a 15-digit PAN-based number—to operate under GST, which is expected to take effect on 1 April 2017.

GSTN will undertake a nationwide drive next month for updating information about the eight million traders in a common usable format following which traders will be issued with GST ID numbers in January.

Mint New Delhi,07th September 2016