ICAI Urges CBIC to Overhaul GST Procedures to Improve Ease of Doing Business

The Institute of Chartered Accountants of India (ICAI) has submitted a comprehensive set of recommendations to the Central Board of Indirect Taxes and Customs (CBIC), seeking wide-ranging reforms in Goods and Services Tax (GST) procedures to significantly enhance the ease of doing business for taxpayers. The suggestions, prepared by ICAI’s GST & Indirect Taxes Committee, focus on removing procedural bottlenecks, curbing discretionary practices by field officers, and strengthening digital integration across GST compliance systems. Registration Process: Call for Standardisation and Reduced Discretion One of the core concerns highlighted by ICAI relates to the GST registration process, where subjective interpretation by field officers continues to cause delays and rejections. Despite CBIC issuing Instruction No. 03/2025-GST prescribing a standard list of documents, officers often seek additional documents such as landlords’ PAN details or personal tax records, citing “satisfaction” under Rule 9 of the CGST Rules. ICAI has proposed amendments to Rule 9 to eliminate ambiguous discretionary clauses and empower the Government to notify an exhaustive list of documents for registration. It has also suggested system-driven controls on the GST portal, including predefined dropdown menus for queries and restricted free-text fields, to prevent arbitrary demands. The professional body has further stressed that registrations should not be rejected merely because a business operates from residential premises, noting that home-based businesses are now a common commercial reality. PAN-Based Data Auto-Population and Single Biometric Verification To reduce repetitive compliance, ICAI has recommended PAN-based auto-population of entity details for multi-State GST registrations. At present, taxpayers must repeatedly re-enter identical information such as legal name, constitution, and partner or director details for each new registration. Similarly, ICAI has advocated a “One PAN, One Biometric Verification” approach, under which Aadhaar-based biometric authentication completed once should be recognised across all States. According to ICAI, repeated biometric verification for the same PAN undermines digital efficiency and increases compliance costs, especially for businesses expanding across State borders. Addressing Gaps for New Units, Minors, and Unregistered Persons The ICAI has also flagged difficulties faced by businesses setting up new manufacturing units in other States, particularly during the pre-operative phase. Field officers often deny registration on the ground that a fully functional “place of business” does not yet exist, resulting in blockage of input tax credit on capital expenditure. ICAI has proposed a provisional or single-window registration mechanism to enable timely ITC availment. In addition, the absence of clear guidelines for GST registration of minors has been identified as a serious legal vacuum, especially in cases of business succession. ICAI has urged CBIC to issue a clarificatory circular allowing registration through legal guardians with appropriate safeguards. Another significant issue raised is the incorrect grant of voluntary registration to unregistered persons during enforcement proceedings, instead of issuing temporary registration IDs. ICAI has warned that this practice leads to jurisdictional defects and deprives taxpayers of their statutory right to appeal, calling for strict instructions to ensure compliance with Rule 16A of the CGST Rules. Annual Returns and ITC: Structural Mismatches Triggering Notices ICAI has devoted considerable attention to flaws in the design of annual return forms GSTR-9 and GSTR-9C. It has pointed out that recent amendments have created artificial mismatches between GSTR-9 and GSTR-3B, particularly in relation to net input tax credit, exempt supplies, and prior-period adjustments. These mismatches, ICAI cautioned, are increasingly leading to automated scrutiny notices and avoidable litigation. To address this, ICAI has recommended restructuring several tables in GSTR-9, introducing separate reporting fields for reverse charge liabilities, exempt supplies not attracting ITC reversal, and prior-year tax payments. It has also suggested revising the formula for net ITC calculation to align it with GSTR-3B figures and prevent reconciliation disputes. Proposal to Merge GSTR-9 and GSTR-9C Given that GSTR-9C is now self-certified and no longer requires attestation by a chartered accountant or cost accountant, ICAI has proposed merging GSTR-9 and GSTR-9C into a single annual return. According to ICAI, this would eliminate duplication, simplify compliance, and reduce the reporting burden, especially for medium-sized businesses. Reverse Charge Mechanism and Cash Flow Concerns The submission also flags structural issues in the application of the reverse charge mechanism (RCM), particularly in sub-leasing of residential dwellings and renting of immovable property located in a different State. ICAI has highlighted how these provisions lead to accumulation of unutilisable ITC and force taxpayers to obtain additional State registrations merely to discharge RCM liability. It has called for targeted clarifications and simplified “pay-only” registration mechanisms to resolve these anomalies. Emphasis on Systemic Reform Concluding its recommendations, ICAI has stressed that merely issuing instructions is insufficient unless backed by systemic changes and supervisory oversight. It has urged CBIC to strengthen portal-level controls and ensure accountability of field officers to prevent deviation from prescribed procedures. The ICAI has expressed its willingness to provide further data or clarifications to support these reforms, reiterating that meaningful simplification of GST procedures is essential to foster investment, reduce litigation, and truly realise the Government’s Ease of Doing Business objectives Click here to Read Suggestions Read More: Constitutional Validity Of Section 17a Of Prevention Of Corruption Act, 1988 Upheld: Supreme Court

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