FICCI SURVEY ON ONE YEAR OF GST

6th July, 2018

 FICCI Survey on One Year of GST

FICCI conducted a survey of enterprises on completion of one year of GST implementation, seeking their
views on impact of this major reform, besides gauging insights and views on some of the key issues and
challenges that were or are being faced by enterprises post implementation of GST.

Key findings of the Survey

Overall Impact

After one year of the implementation of the Goods and Services Tax, survey findings reveal that most
respondents are happy with the implementation of this reform, with 76% respondents stating that GST
has a positive impact on their businesses.

Furthermore, the survey reveals that the government has been fairly responsive to suggestions and
queries of the industry, with 86% respondents stating that the government has taken adequate steps
regarding change in rates and providing clarity on various issues through rules, notifications, issuing
FAQs and guidelines.

Overall Positive impact of GST on Satisfied with Government

Business Responsivess?

24% 14%
Yes Yes
No No
76% 86%

Impact on Sales and Profits

43% respondents to the survey stated that GST had positively impacted the demand for their goods and
services. While 40% stated that there was no impact on the demand, only 17% said that the tax had a
negative effect on the demand of their products.

In terms of impact on pricing, 63% of the respondents stated that the introduction of GST had impacted
pricing positively, while the remaining 37% stated otherwise. The survey shows that the pricing of
participating enterprises in the survey has been impacted primarily due to change in GST rate and
change in Input Tax Credit, with 71% and 61% respondents respectively stating the same.

2|Page ( All graphs in the report show % respondents)

 Impact of GST on Demand Impact of GST on Pricing

40% 43% Positive 37%

Positive
Negative
Negative
No impact 63%
17%

Important Reasons for Change in

Pricing

Change in ITC 61%

Change in GST rate 71%

% respondents

In terms of impact on margins, 55% of survey respondents mentioned that GST implementation has
impacted their gross margin negatively, while 45% said that their margins were impacted positively. Out
of the respondents citing a negative impact on gross margins, 58% respondents said that the key reason
for same was their inability to recover increased tax from the customer.

Impact of GST on Gross Margins

45% Positive
55% Negative

3|Page ( All graphs in the report show % respondents)

Impact on Employment

64% respondents stated that there was no impact on employment under GST. However, other
respondents cited a positive impact on employment and mentioned that their demand for workforce
had increased mainly due to the extensive return filing process under GST, reconciliation of inputs in the
GST portal, e-way bill generation, etc. While GST opened up accountancy jobs, respondents also said
that as margins improved, it enabled companies to focus on operations, encouraging improved
recruitments in operations.

Supply Chain

62% respondents said that GST has affected their choice of vendors or transporters.

In terms of changes in supply chain costs, 21% respondents said that there was a fall in their supply
chain cost under GST, while 45% said that there was no change. 34% respondents said that supply chain
costs had increased.

GST affected choice of vendor Change in supply chain cost under

GST
Increased
38%
Yes 34%
45% Decreased
62% No No Change

21%

Transition to GST

80% respondents to the survey mentioned that transition to GST from the old system of tax was difficult
for them, whereas 20% said that it was smooth.

In-fact, 67% respondents found the time for transitioning to be insufficient.

Transition to GST Regime Time for transition to GST

20%
33%
Smooth Sufficient

80% Difficult Insufficient

67%

4|Page ( All graphs in the report show % respondents)

GSTN Portal

59% of the respondents mentioned that they were not satisfied with the capability of the GSTN portal.
In fact, 96% respondents felt that improvements were required in the working of the portal.

Satisfied with GSTN Portal Improvements required in GSTN

Capability? Portal?
4%

41% Yes Yes

59% No No

96%

The following suggestions were made for the improvement of the GSTN Portal:

• Increase bandwidth and server capacity to enable assessees to post data and file returns on the
portal on the due date without undue hassles. It has been observed that the system normally
collapses on or near the due date of filing the return.
• Respondents suggested that the procedure of filing returns and compliance should be
simplified.
• The GSTN portal should be more user-friendly and have an interactive interface, for e.g. 2A
report generated by the portal does not give detailed analysis of vendor/invoice wise
reconciliation and matching of purchase transactions uploaded in GSTN.
• The Tax Department should circulate guidelines for new updates and new utilities related to the
GSTN portal to tax payers for procedural changes in return filing well in advance.
• There is late/incorrect reflection of data on the portal regarding returns filed and tax payments
made. Appropriate action should be taken on this account.
• There should be options to make corrections after submission of return in case of errors.
• Grievances raised in the GSTN portal are closed without addressing the issue properly. Steps
should be taken to improve the effectiveness of resolving the issues.
• It has been reported that filing of returns through digital signature leads to constant errors.
Appropriate measures should be taken to take care of this situation.
• 24 X 7 helpdesk service should be provided.
• Data download is not available from the portal over a certain maximum number of line items;
this should be improved.
• A central return mechanism should be introduced for entities with pan-India operations so that
return filing is streamlined.
• Payments made to the bank take a lot of time to reflect in the electronic ledger. These need to
be made more efficient.
5|Page ( All graphs in the report show % respondents)
 • Issues relating to transitional credit not being credited properly to the electronic ledger should
be looked into and addressed.
• Systems should be fully tested before implementation of any change made in any process
relating to GST.
• Offline utilities to file return should be improved.

Compliance Issues

The respondents were asked to highlight the key compliance issues they faced under the GST regime.
Issues with the GSTN portal remains on the top of concerns of businesses, with 68% of respondents
stating the same. 60% respondents mentioned cumbersome procedures and documentation as a key
issue, 36% mentioned cost of compliance and 28% mentioned lack of IT infrastructure as key issues.

Key GST Compliance Issues

Issues with GSTN Portal 68%

Cumbersome Procedures and Documentation 60%

Cost of Compliance 36%

Lack of IT infrastructure 28%

E-way Bill

96% respondents mentioned that as far as ease of doing business is concerned, e-way bill mechanism in
lieu of check-post is more effective. 64% respondents to the survey cited a reduction of transportation
time under the GST regime. Out of the respondents who cited a reduction in transportation time, 56%
respondents cited reduction by up to 10%, 25% respondents stated 10-20% and 19% stated a reduction
in transportation time by 20-40%.

E-way bill over checkposts for Reduction in Transportation Time

4% EoDB? under GST

19%
Upto 10%
Yes
10 to 20%
No 25% 56%
96% 20 to 40%

6|Page ( All graphs in the report show % respondents)

Nevertheless, 24% respondents mentioned that they faced compliance issues with the e-way bill
mechanism. Out of such respondents that faced issues, 83% cited tracking of e-way bill for modification
as an important reason, 67% each cited limited validity period and lack of appropriate knowledge
respectively, and 50% each cited lack of flexibility and availability of infrastructure

Reasons behind E-way Bill Compliance Issues

Tracking of eway bill for modification etc. 83%

Limited validity period of eway bill 67%
Lack of appropriate knowledge 67%
Lack of flexibility during transit 50%
Availability of infrastructure 50%

(% of respondents who mentioned they faced compliance issues with the e-way bill mechanism)

Interaction with GST Authorities

There was a mixed response with respect to respondents’ interaction with GST authorities. 29% of the
respondents stated that their experience of interaction with the GST authorities was positive, while an
equal number of respondents said that their experience was negative. 42% respondents said that they
were indifferent about their experience of interaction with the authorities.

Interaction with GST Authorities

29% Positive
42%
Negative
Indifferent
29%

GST Refund

71% respondents mentioned that they faced issues in claiming refund of GST. The important reasons
cited were significant efforts in follow up for processing of claims, technical issues in the GSTN portal,
mismatch between relevant GSTR and shipping bill leading to the inconvenience in claiming of refunds.

70% respondents mentioned that it took more than 90 days from date of submission of application to
obtain GST refund; half of these respondents mentioned that it took more than 180 days. 18%
mentioned that it took 30-90 days while 12% stated that it took less than 12 days from the date of
submission to obtain the refund.

7|Page ( All graphs in the report show % respondents)

 Time taken to obtain GST Refund
Less than 30 days

12% 30 to 90 days
35%
18% 90 to 180 days

More than 180

days
35%

Authority for Advance Ruling

Amongst suggestions received from the respondents, one suggestion was to overhaul the mechanism of
Authority for Advance Ruling (AAR) under the GST regime. AAR should not comprise of revenue officers.
To achieve the intended objectives of advance ruling mechanism, an independent high level Central
body (similar to the one under the erstwhile indirect tax regime) be constituted as ‘Authority of Advance
Ruling’ under the GST regime.

Tariff Rationalization

71% respondents felt that there was a need to reduce tariffs of GST in their sector of business.
Respondents suggested tariff rationalization on the following commodities:

• EPC projects pertaining to setting up of Solar Power Generation Plants

• Automobile tyres
• Agricultural implements
• Garments
• Electrical Goods
• Steel
• Alcoholic beverages (to be included under GST)

Reverse Charge Mechanism

89% respondents were not in favour of reverse charge mechanism on purchases from unregistered
dealers. Of these, 71% respondents stated that it would lead to increased compliance burden for the
recipient, 57% stated that it would have a negative impact on business of small dealers and 39% said it
would lead to no incremental revenue for the government.

8|Page ( All graphs in the report show % respondents)

 Reasons for averting RCM mechanism

Increased compliance burden for recepient 71%

Negative impact on business of small dealers/traders 57%

No incremental revenue for government 39%

Other miscellaneous findings

• 53% respondents felt that the new central incentive scheme in lieu of excise area based
exemption is not good enough to compensate the price advantage available prior to July 1,
2017.
• 63% respondents stated that the proposed further changes in return filing process are
premature and the authorities should wait till completion of first annual return before
implementing any changes in the compliance framework.
• 68% respondents feel that matching of ITC is useful to the taxpayer as it can avoid disputes in
future.

Key suggestions

The respondents have identified key areas where the GST law could be made more tax payer friendly.
The respondents have also made relevant suggestions towards the same.

Key changes in GST Law

Return 79%
GST Rate 75%
Refunds 57%
Input tax credit 50%
Documentation 36%
Credit note/debit note 36%

9|Page ( All graphs in the report show % respondents)

Other suggestions

• It has been observed that the staff at GST Suvidha Kendras are not fully equipped to resolve
issues. They should be adequately trained to ensure that the GST Suvidha Kendras become an
effective issue resolution mechanism.
• Minimise the number of returns to be filed.
• ITC flow should be seamless and the recipient of goods/services should not be penalized for
non-payment of taxes by supplier.
• Rationalise levy of compensation cess.
• Separate documents to be abolished (like generation of invoices for RCMs) and internal
documentation mentioned by the assesse should be relied upon.
• Clarifications given by AAR to be made easily available on GSTN portal for easy reference.
• Refund under Budgetary Support Scheme should be allowed on a provisional basis with a CA
certificate in order to reduce working capital blockage.
• Shipping bill wise details are not available to assessee for refund received through bank due to
which assessees are facing issues in reconciliation. Necessary steps to resolve this issue must be
taken.
• Refund on units in fiscal benefit locations and exports with payment of IGST to be fast-tracked
and process for the same to be simplified.
• ITC should be allowed on all business expenses without any restrictions. ITC should be allowed
on the basis of scanned copy of invoice/documents.
• Refund Procedure including submission of documents should be made online.
• Converge the existing band of GST rates to fewer rates which would reduce complexity and
eventually lead to simplification.
• Remove original invoice reference against credit note/debit note. One credit/debit note should
be allowed to be issued against multiple original invoices.
• Rationalise rate under GST regime for goods falling under 28% rate category.
• Clarifications should be provided by the government regarding treatment of trade offers under
the GST regime.

10 | P a g e ( All graphs in the report show % respondents)