GST issues

Now that GST is two months old, some thoughts from practical experience. Basically three issues.

One is payment of GST to govt within one month of raising invoice is draconian. Nobody in India pays us within one month of raising of bill save in exceptional cases. Mostly payments are received on average between 3 to 6 months. Earlier we used to pay to the govt. on quarterly basis and that too on receipt basis. Now if we have to pay the tax in advance even before we receive our money, that means our cash flow has gone out of the window. The SME sector is badly hit. It should be minimum 3 months from date of invoice.

Second is the ridiculous concept of reverse charge mechanism wherein we have to pay tax on our purchases from unregistered dealers. That means we have to pay the GST and will receive input credit on that the next month. But our cash flow is again gone.

Third is the micro management here which means we have to report every single invoice of purchases and sales to the govt. As far as i recall in all these years of tax administration, whether direct or indirect, govt. has never asked for details of every single invoice and then match it in the system. There is a trust issue here which was prevalent all along but is sorely lacking in the GST system. Self assessment has a different meaning here. Compliance never became so onerous.

These are my observations from practical experience, unless i have understood it wrongly.