New Delhi, Oct 4 (PTI) The GST Council is likely to consider sweeping process reforms on Wednesday to make tax compliance easier for businesses, including allowing small e-commerce sellers to use platform warehouses for GST registration, protecting genuine buyers’ input tax credit and reducing low-value litigation, sources said.
The proposals, part of the GST 2.0 process reforms, seek to simplify registration and return filing, make goods movement more predictable and reduce disputes between taxpayers and the tax department.
One of the proposals seeks to allow small sellers using e-commerce platforms to treat the platform’s warehouse as their registered place of business in states where they do not have their own premises. A seller would need a genuine presence in one state, where physical verification and Aadhaar authentication would be completed, and registrations in other states could be obtained with the consent of the e-commerce platform without further tax-officer involvement.
The move could enable around 9.5 lakh small sellers to access the national market without establishing physical offices in every state where their goods are stored, while creating greater tax parity across competing e-commerce business models, sources said.
The Council may also consider a proposal to protect input tax credit of genuine buyers who have valid invoices even if an upstream supplier defaults on tax payment. The recovery action in such cases would instead be directed at the defaulting seller.
The proposal seeks to address a major source of GST litigation and business uncertainty, particularly for companies purchasing from small and new vendors.
FEWER LOW-VALUE DISPUTES
To reduce litigation and administrative burden, the Council is likely to consider a proposal to bar issuance of GST notices where the tax demand is below Rs 10,000.
Such cases account for about 20 per cent of all cases by number but involve a negligible amount of tax, according to the proposal. The threshold could also apply to pending cases, whether at the adjudication or appeal stage.
For demands above Rs 10,000, tax officers would first have to send an intimation to the taxpayer and provide an opportunity to respond before issuing a formal notice.
The Council is also likely to consider common standards for raising and deciding tax demands, including detailed guidelines on drafting and serving notices, distinguishing fraud from ordinary short-payment, conducting hearings and issuing reasoned orders.
Under the proposal, when a taxpayer chooses to settle a dispute rather than litigate, the amount paid would be termed a “charge” rather than a penalty.
EASIER REGISTRATION & RETURNS
The GST registration process is also being redesigned so applications can be completed correctly the first time.
The proposed system would provide guidance at each stage, show applicants only the sections relevant to them and provide a tailored list of documents required for uploading. Details from an existing registration in another state could be carried over, while businesses applying for registrations in multiple states could complete them together.
The system would also determine the appropriate tax office based on the location of the business.
The Council is likely to consider a unified GST registration documentation process, simpler annual return filing, and a quarterly tax payment option for MSMEs that supply only to consumers.
SMARTER LOGISTICS CHECKS
Another proposal seeks to introduce intelligence-led logistics and transit checks, under which vehicles carrying goods could be stopped only on the basis of specific prior authorisation from a senior officer and generally only by the state of origin.
Exceptions would apply where documents are missing, or tax is payable by the buyer.
The proposed system is aimed at reducing repeated stoppages of vehicles crossing state borders, cutting transit times and freight costs and making movement of domestic and export cargo more predictable.
The Council may also consider a proposal for a single 5 per cent GST rate without input tax credit for delivery of goods ordered through e-commerce platforms.
Other proposals include removing ambiguity over the export status of services supplied through an Indian company’s overseas branch and withdrawing the IGST exemption on imports of gold, silver and platinum by specified banks and nominated agencies.
The Centre and state GST officers’ working group has met more than eight times over the past year, and the GST National Coordination Committee has met three times to firm up the proposed process reforms, sources said.
“The process reforms proposed under GST 2.0 take forward the trust that the government reposes in taxpayers and make life easier for businesses and traders by reducing compliance,” a source said.
AMRG Global Managing Partner Rajat Mohan said the proposals address several structural concerns that businesses and tax professionals have highlighted since the introduction of GST.
“After years of experience with the law, the focus is now shifting from revenue protection through restrictions and procedural controls towards a more mature system built on seamless credit, working-capital efficiency, taxpayer certainty and technology-led enforcement,” Mohan added.
