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Making the tax payer compliant

Recently different rates of Goods and Service Tax (GST) have been announced. When you hear from the market, it appears as if everybody was waiting just for announcement of GST rates.

Rates definitely are needed to forecast the financial impact. However, it is not the most important thing for actual preparation for GST.

The guiding principle in my life is very aptly represented by a sentence from Zen Master Dogen Zenji – “My Eyes Are Horizontal – My Nose Is Vertical”.

What is the simple meaning of this sentence? Zen Master uses the language of paradox and always indicates at something which is far deeper than it appears. Everybody knows that eyes are horizontal and nose is vertical. No human being could ever have made any observation contrary to this, then what was the need for Zen Master to remind us of the reality we already know? Is it that simple?

But if you go for the deeper meaning, it actually means seeing things as they are, without bringing our own biases/preferences/likes/dislikes etc. etc. If I see GST from this angle, my observations are as under:

  1. GST is a change of “Ecosystem”. It is not merely change of taxes or tax rates or calculations. It is actually the Ecosystem of taxation which speaks from “roots to fruits”. Normally, it involves understanding of the entire concept of taxation and its effect.

  2. From the very beginning (from my childhood), I have seen the first sentence as “taxes extra”. Then our system of not insisting on invoices or other documentary evidences, with a clear view of avoiding taxes and also not recording the transactions. When we have exemption from taxes under Small Scale Industry, with a limit of Rs. 1.5 crore turnover, many of us open up another entity when the turnover exceeds Rs. 1.5 crore, instead of paying the taxes. If we need tax compliance, we need to change our attitude.

  3.  Any compliance requires discipline and discipline requires commitment in terms of time. The element of time has drastically changed with introduction of IT Systems. ISRO will be launching three satellites in next 18 months to speed-up internet. Speaking to Times of India, ISRO chairman Kiran Kumar said, "We will launch three communication satellites. GSAT-19 in June and GSAT-11 and GSAT-20 thereafter” (Times of India Dtd. 21.05.2017). In other words, bandwidth would be available to comply with all electronic data in near future.

  4. What is our attitude? Do we like being compliant or otherwise? We need to understand that GST requires time bound compliance. Are we really ready as an organization? Are our people trained to deliver? Do we have conceptual clarity? Have we tried to understand the implications in totality? Our attitude, by and large, is still waiting for things to happen.

  5. On whom are we relying? Our Chartered Accountant? Our own people? Our system? Our culture towards compliance? Our habits (always trying to pay on the last day)? We need drastic change in a short span of time. Are we really aware?

  6. We need to learn, we need to adapt and we need to take responsibility. When I say this, “we” includes all stakeholders, Government and Government machinery, industries, professionals, everyone. We should not wait or keep speculating about the date of introduction – 1st July, 1st August or 1st September. What difference does it make, if we are not going to be ready?

My eyes are horizontal, my nose is vertical – Do we really understand?

Let me end this with another Zen Proverb –

“If you understand, things are just as they are; if you do not understand, things are just as they are.”

Your views are welcome!

Authored by Sudhakar Kasture (International Trade Consultant)

Director, EXIM Institute (A Division of Helpline Impex Pvt. Ltd.)

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