Thread by @iam_anandv

This article by @deepshikhasET requires it's own thread on the stupidity called GST.
economictimes.indiatimes.com/news/economy/f…

1. Everything in GST is based on Invoice level matching. This was a big architecture decision to control tax evasion.
2. Why so?
3. In the earlier Service tax regime, Businesses self declare the input tax credits based on incoming invoices.

4. They also self declare the output tax based on what they collected. And then they paid of the difference.
5. This meant there were many many means to evade taxes because there is no double entry book keeping across businesses.
6. Now this is why GST said "Invoice matching".

7. But invoice matching is really a tough thing to do. The site crashed so frequently that they abandoned doing it. Instead they resorted to asking biz to do summary filing in GSTR-3B which is conceptually the same as self declaration.

8. Then they gave biz 3 months (< 1.5 CR turnover) to file GSTR-1, which is tax credits to their buyers (This is double entry book keeping against buyers' GSTR-3B).
9. So you have two timelines (GSTR-3B on monthly and GSTR-1 on monthly/quarterly).

10. Try matching even summaries of invoices across two timelines and you will know how hard it is. So basically invoice level matching is "technologically dead", but they don't want to announce it, because it will show their incompetence in dealing with implementation.

11. Now people have figured this out on the ground. So they play like this.
12. Start a fake biz, File 3B for a while and don't file GSTR-1. An existing business will take credits, but then fake biz disappears (Does not file 3B)
13. The govt is now deprived of credits and tax.

14. But is everything fake biz? Nope. Because it is very difficult to distinguish biz that got shut down and dying from a fake biz.
15. So a raid will find "real biz that are dying" but will not find "fake biz". And they will haul up the real dying biz with more legal hassles.

16. This means there will be even more anger against GST than what it is already.
17. Remember that the site crashes more often than not and filing returns even for legally compliant biz is a hassle and night mare.

In short, it is an excellent way to lose an election.
#