The citizenship law, which has triggered protests across the state, has cast a shadow on GST compliance in Karnataka. Several traders in Karnataka are complaining that the extension of deadline following some technical glitches in the Goods and Services Tax Network (GSTN) has not helped their cause because of the last-minute rush. In Mangaluru and Chikkamagaluru, internet was disconnected for two days following violence during protest against the Citizenship (Amendment) Act. “The 48 hours matter under tight deadlines,” said Bihar deputy chief minister Sushil Kumar, who is also the head of a group of ministers (GoM) on GST. He was in Bengaluru to chair a meeting of the GoM.
Officials said the suspension of internet in parts of the state following widespread protests against CAA has hurt GST collections. Modi endorsed the official view and said many states including Karnataka disconnected internet in areas affected by CAA agitation because of which traders could not file tax returns in time. The registered dealers were supposed to file their tax returns after paying GST on or before December 20, but many couldn’t do so as the GSTN web portal – where traders file returns – developed glitches. Having failed to get all registered dealers paying tax and filing their tax returns before the deadline, the Centre extended the deadline by three days. D P Nagendra Kumar, principal chief commissioner of central taxes, Bengaluru zone and Commercial taxes commissioner M S Srikar concurred with Modi’s views and said the extension of the deadline did not have much impact on revenue collections due to internet issues. However, Karnataka did well in terms of the national average.
While only 71% of the 1 crore registered dealers across India could file GST returns before December 20, the state has done better with 75%. Karnataka in fact had the highest collection till date in October Rs 7,988 crore when about 80% of 7.6 lakh dealers filed their tax returns. The corresponding India figures is Rs 1 lakh crore. “The biggest problem, however, is the late fee and interest on tax liability that traders are liable to pay. Thousands of traders are getting notice even after the government has extended the deadline,” said S Prakash, former secretary of Karnataka Tax Practitioners Association. A trader must pay Rs 50 per day towards late fee and 18% interest on the tax liability. Trade representatives rue that the traders are being penalised for no fault of theirs.