RISING COST OF COMPLIANCE

THE GOODS AND SERVICES TAX WAS INTRODUCED TO PROMOTE EASE OF DOING BUSINESS BUT FREQUENT AMENDMENTS AND ESCALATING PROCEDURAL EXPENSES OVER TIME HAVE TURNED IT INTO A GROWING BURDEN FOR ENTREPRENEURS

- By SONAL KHETARPAL /

In December 2022, Muzaffarnagar-based entrepreneur Neeraj Kedia, managing director of zinc sulphate manufacturing firm Chakradhar Chemicals, received an unexpected notice from the Goods and Services Tax (GST) department, raising a tax demand of around Rs 95 lakh and interest of Rs 1.15 crore for the period from July 2017 to March 2018. It stated that the Input Tax Credit (ITC), which allows businesses to get reimbursement for the taxes they paid on their purchases, should not have been claimed by Kedia, as his supplier had not filed Form GSTR-3B, the monthly return to declare GST liabilities. The notice further alleged that Kedia had failed to file the form back in 2017. He was stunned. Like many small and mid-sized business owners, such a notice triggered not only a legal alarm but also operational disruption. Kedia responded swiftly, highlighting a key point: the Form GSTR-3B functionality wasn’t even available on the GST portal at the time in question. The case was finally settled in September 2024. But addressing a show-cause notice years after is no easy task—it involves combing through old records, rechecking financial data and reconciling accounts. “You have to jog your memory, track down data from years ago and build your case from scratch,” Kedia explains.

Paperwork, though, is only part of the ordeal. Other hassles could include multiple visits to the GST office, pleading your case with officials and, finally, succumbing to the one solution that magically gets files cleared—paying a bribe. This is the common reality entrepreneurs encounter routinely, overwhelmed by the growing complexities of GST compliance and notices. However, of the more than 10 entrepreneurs INDIA TODAY spoke to, none wanted to go on record, for fear of retaliation.