How I Lost My Job Due to GST

Multiple categories of tax slabs in the new GST regime cost an accountant his job.

Multiple categories of tax slabs in GST regime is leading to confusion and chaos.

(Photo: Erum Gour/ The Quint)

The Indian government levied the Goods and Services Tax (GST) to make the tax process smooth and effective for taxpayers. Little did I know, however, that the tax rollout on 1 July – which was celebrated by the country at large – would become a nightmare for me.

My name is Rajesh Kumar (name changed) and I worked as an accountant at a reputed company in India. I had been working there for the last five years and had earned a good reputation at the firm through my work. The company had given me the responsibility of managing their business accounts, which was to pay tax on time and help my firm with the same so that the company doesn’t end up paying interest or penalty.

Everything was going fine as I was aware of the tax laws, until the GST was introduced.

Difficult to Understand the Nitty-Gritty of GST

The GST is different from other tax laws and since it was implemented in a hurry, I did not get time to study and analyse the tax. Due to this, I had to seek help from different professionals every time I had a query.

The concept of GST new and chances of mistakes are high while filing returns. And a mistake while filing the GST returns was all it took for my firm to fire me from the post of head accountant.

I was filing the GST returns, ie GSTR-3B (return form), for the month of July. It is a summary of the returns which is to be filed by taxpayers. Based upon the summary, one needs to be pay the GST tax liability. The tax liability is divided into two parts – interstate and intrastate.

In case of intrastate supplies, ie within the state, CGST and SGST is charged as explained below:

Central Goods and Services Tax (GCST): The central GST is imposed by the Central government on all the supplies within the state.

State Goods and Services Tax: SGST or State GST, as the name suggests, is imposed by the state government on all the transactions outside the state.

In case of interstate supplies, ie outside the state including exports, only IGST is charged as explained below:

Integrated GST: IGST is an amalgamation of CGST and SGST and collected by the Central government.

Let me share fictitious figures to explain how I lost my job due to an error filing the returns for month of July 2017.

ITC: Input Tax Credit

The total liability of the company is Rs 2.75 crore and the total ITC (input tax credit) available is Rs 79 lakh. Hence, Rs 1.96 crore needs to be paid to the government. This is what should’ve been done in an ideal situation.

However, owing to work pressure, I became confused between different types of GSTs. In other words, the total tax liability of the company is Rs 1.96 crore which is divided into three heads of GST, and, unintentionally, at the time of payment of tax I paid the amount under the IGST.

Loopholes in Law

Due to my mistake, IGST was paid lesser by Rs 85 lakh and CGST in excess of the same amount.

After the payment, I thought that the excess payment under the CGST would be adjusted against the IGST. I received the shock of my life when I read the GST law on this.

As per the GST Act, cash payment under one head of GST cannot be set off against another head. In other words, the excess payment made on CGST cannot be utilised against the liability of IGST.

As per the legal provisions of the GST, the excess balance in electronic cash balance cannot be utilised against any other head, and hence, in my case, the company needs to pay the IGST again and keep the excess balance in CGST for future adjustments.

Further, in case the person is not able to adjust the excess balance in CGST, then he may claim the refund of the excess balance in CGST.

Due to my error, the working capital of Rs 85 lakh got blocked in the electronic cash ledger. After reviewing this mistake, the company issued me a notice letter to leave the job within 30 days from the date of the letter.

This was my story and I have written it so that other persons can learn from my mistake and not repeat the same. Filing GST returns is not a difficult task but it is confusing due to the new law and multiple heads like CGST, SGST, and IGST.

(The article is a narrative based on the author’s experience with the GST. This is a fictional account to share with our readers GST-related issues being faced by consumers)

Also Read: Worried About Tax on Rental Income? Here Are the Solutions!

( CA Paras Mehra is a thinker, speaker, and a startup consultant. He has consulted and advised over thousands of start-ups. He is professionally associated with the hubco.in, which deals with GST registration and GST compliance. This is a personal blog and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)

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