The Institute of Chartered Accountants of India (ICAI), the country’s largest professional accounting body, has submitted a comprehensive set of recommendations to the government aimed at resolving persistent practical challenges under the Goods and Services Tax (GST).
The proposals, compiled by the GST & Indirect Taxes Committee of ICAI, cover a wide range of issues—adjudication, input tax credit (ITC), registration, refunds, return filing, and e-way bills—reflecting concerns raised by taxpayers and practitioners over the eight years since GST’s rollout.
Key Challenges Highlighted
- Adjudication & Enforcement
- Officers often give taxpayers only 1–2 days to respond to pre-show-cause communications (Form DRC-01A), instead of a reasonable timeframe.
- Virtual hearings, mandated by CBIC instructions, are still denied in many cases.
- Notices are only uploaded on the GST portal, with no dual service through post, SMS, or email, leading to ex-parte orders.
- Despite digital filings, officers continue to insist on physical submission of documents.
- No integrated case tracker exists, making it difficult to monitor the full lifecycle of a proceeding.
- Input Tax Credit (ITC)
- Lack of fallback mechanism for distributing ITC via Input Service Distributor (ISD) when new registrations have no past turnover.
- Removal of the tax rate column from GSTR-2B hampers reconciliation.
- Taxpayers who withdraw registration cancellation face difficulties in restoring reversed ITC.
- Registration
- Taxpayers often select wrong jurisdictions due to lack of system guidance.
- Multiple amendments cannot be filed simultaneously, causing delays.
- Registrations are sometimes cancelled without speaking orders, disrupting businesses.
- In mergers/demergers, pending proceedings remain linked to the old GSTIN, creating compliance gaps.
- Integration glitches between MCA’s SPICe+/AGILE-Pro-S system and GSTN delay new company registrations.
- Refunds
- Exporters and MSMEs face delays despite statutory timelines, with provisional refunds often not granted.
- No refund mechanism exists for deposits made by casual and non-resident taxpayers whose registrations are rejected.
- Special Economic Zone (SEZ) units lack clarity on claiming refunds of ITC distributed via ISD.
- Returns
- GST portal defaults to the current month in return dashboard, though filings are usually for the previous month.
- EVC (Electronic Verification Code) cannot be generated in advance, causing last-minute filing issues.
- Form CMP-08 lacks separate reporting lines for taxable and exempt supplies.
- E-Way Bill
- Current system does not allow entry of “ultimate recipient” details in Bill to – Ship to transactions, creating compliance ambiguity and litigation risks.
Recommendations
ICAI has suggested a series of reforms including:
- Minimum 7 working days for replies to pre-notices.
- Mandatory virtual hearing rights for taxpayers.
- Dual service of notices (digital and physical).
- Unified case tracking system with draft-saving features.
- Auto-restoration of ITC in case of registration withdrawal.
- Seamless migration of pending proceedings during mergers/demergers.
- A faceless, time-bound refund framework with AI-based scrutiny.
- Default setting of return dashboard to the previous month.
- Addition of “ultimate recipient” field in e-way bills.
Why It Matters
“These changes are aimed at improving ease of compliance, ensuring transparency, and reducing the compliance burden for taxpayers,” ICAI’s GST Committee noted. The suggestions come at a time when the government is actively considering GST 2.0 reforms, following Prime Minister Narendra Modi’s Independence Day assurance of major changes by Diwali.
If accepted, ICAI’s recommendations could significantly ease the pain points faced by small businesses, exporters, and corporate taxpayers, while also reducing unnecessary litigation and departmental inefficiencies.
