Review GST framework: PAC suggestion to finance ministry

The Public Accounts Committee (PAC) has recommended that the Union finance ministry undertake “a comprehensive review of the GST framework” to simplify the Goods and Services Tax regime while calling for a revamped GST 2.0. Parliament’s audit watchdog has also asked the government to “eliminate unnecessary procedures and requirements” that complicate compliance.

“The Committee call for a revamped GST 2.0 after consultation with all stakeholders including trade associations and taxpayer groups to address the concerns of taxpayers and to ensure timely collection of taxes due so that the declared object of GST — simplified and rationalised indirect tax system — is established,” the PAC led by Congress lawmaker KC Venugopal said in its latest report, which was presented to Parliament on Wednesday. 

It also suggested the government to review “streamlining the return filing process by consolidating forms and reducing the frequency of filings where possible.” In addition, the “ministry should enhance the user-friendliness of the GST portal, ensuring that it provides clear guidance and support for taxpayers at every step of the filing process,” the report added. 

“Further, the Committee exhort the Ministry to consider implementing a tiered compliance approach, where smaller businesses face fewer requirements and simplified processes compared to larger entities, thereby reducing the burden on smaller Taxpayers,” the report said. 

The audit panel’s recommendations come amid the demand from the Opposition, particularly the Congress, for a better GST regime. Congress leader Rahul Gandhi had dubbed it “Gabbar Singh Tax” and promised a revamped GST in the party’s manifesto for the Lok Sabha polls. 

The GST came into effect from July 1, 2017 subsuming a raft of indirect taxes levied at various rates in states. 

Nearly eight years later, the PAC has observed that the current GST collection system poses challenges for micro, small and medium enterprises (MSMEs), “which may struggle with compliance due to the complexity like Inverted Duty Structure (IDS) and administrative burden of the existing processes.” 

The ministry, in its response to the panel during the review, has acknowledged the need for a more taxpayer-friendly approach but “did not provide specific measures tailored to the unique needs of MSMEs,” the report said.