While the noise of lower GDP numbers is troubling the Government, the challenges of GST implementation is making it look more adverse. On completion of three months of GST rollout, the Finance Minister and the GST Council reviewed the challenges faced by the business during the first quarter of GST, as they had promised during the GST rollout.Before we look at the key highlights of changes proposed by GST council, we should review the key challenges of GST during its first quarter after rollout.: It would not be an exaggeration that till today large number of businesses do not understand the concept and requirements of GST, so we can imagine the level of confusion during the initial days of GST. Due to lack of awareness people were initially reluctant to do large and new trades, which has caused a big road block to the acceptance of GST and as a result have impacted the businesses drastically.This particular clause has proved to be the biggest roadblock of GST journey so far. As per section 9 (4) of Central Goods and Services Tax Act, every registered person is required to pay tax on reverse charge basis on the purchases made from unregistered vendors. This has impacted business in following ways:a. Big businesses have started to avoid purchases from unregistered vendors, as it would have implied additional compliance and blocking working capital block. This in turn has resulted in small business closing down due to reduction in customer base.b. Additional working capital requirements, as businesses are supposed to discharge the tax liability in cash and credit cannot be utilised for the payment of reverse charge tax.c. Challenges in maintaining accounting records as businesses are required to report such purchases separately. This became an additional requirement for them to maintain detailed accounting of such purchases.Challenges for technology were on both sides for Govt and businesses, let us understand both in detail:a. GSTN Portal - Till now we were getting a feel of challenges for businesses, but GSTN portal is a bigger technology challenge for Government. Due to delayed implementation of GSTN portal, the government was forced to delay the monthly compliance multiple times and as a result the last day to comply for July transactions was set for October 10 for GSTR-1. Even today, most of the basic functionalities of key fields like address, additional place of business are not completely available on GSTN portal. Most of the businesses trying to comply with GST on GSTN portal have complained about inconsistent results shown on GSTN portal.Till now the basic structure of GSTN portal is not completely operational, which has forced number of businesses to delay their compliance. In addition to this, there is a lack of understanding about GSTN portal with different departments under GST. The GST department was often clueless when specific queries were raised by tax payers about compliances and requirements. Lastly the GST portal is not aligned to the frequent changes done by GST council, as number of times it was observed that amendments were made, but necessary changes were not available on GSTN portal.b. Accounting system - Large number of small businesses were not in practice of maintaining proper records historically due to many reasons, but the main reason was that their margins did not allow them to have full time accountant. With GST rollout, they are now required to maintain proper records in order to avail the relevant credits and customer requirements. In order to comply with such requirements, they moved towards available accounting software providing GST solutions, but since GST law is not completely stable, it is difficult for any accounting solution to provide accurate GST compliance reports. Hence being 'first time users' of technology these businesses were finding it difficult to adopt these technologies. This has also increased their cost of operations and they started losing time in maintaining records, instead of adding any new business.Exporter of goods and services faced multiple challenges. For the sake of understanding let us divide them in goods and services:a. Challenges for exporter of goods - As per GST provisions exporters were to get monthly refunds to the extent of 90% of taxes paid, subject to the accurate compliance and completion of the procedure for refund. But, due to delay in compliance dates the large amount of working capital from exporters got blocked in inputs and duty payment, as a consequence they had little or no capital available with them for doing business. This has resulted in pulling exports to the lowest levels in comparison to the recent years.b. Challenges for service providers - Since GST applies equally to goods and services, along with lots of benefits it brought certain challenges for service providers as well. Now, under GST regime service providers exporting services are required to take LUT / bond, in order to export without payment of duty. Since most of the small businesses were not eligible for LUT they should have received foreign inward remittances amounting to a minimum of 10% of the export turnover, which should not be less than Rs. one crores, in the preceding financial year, hence they had to apply for Bond.In order to get Bond from assessing officer, each business has to furnish the bank guarantee of certain amount, which pushed them to block certain money in form of fixed deposit, thus resulting in blockage of working capital for them.One of the first challenges faced by most of the businesses was to get the correct rate of tax applicable on the products they are buying and selling and it took them some time to get the correct rate, which in turn delayed the invoicing to their customers during initial days. While they emerged out of this initial challenge, the real issue of higher tax rates on necessary goods needed to be resolved. GST rates were decided on the basis of old laws, but due to technicalities of GST the hardship of these tax rates could not be envisaged correctly.While these were few challenges responsible for GST pain, the GST council has considered them and have decided on following changes on GTS council meet that happened on October 6:1. Reverse charge on purchase of goods and services from unregistered vendors has been put on hold till March 31, 2018.2. There will be no need of any bank guarantee for getting the bond for goods and service exporters.3. Provisions are made for quick refund process for exporters.4. Compliance requirements for traders below Rs 1.5 crore have been relaxed and now they have to file quarterly returns instead of monthly compliance.5. Rates of certain basic goods have been revised downwards.These changes look very positive and should make the GST journey smoother and faster. But, on hindsight the key challenges related to awareness, GSTN portal and key GST rates are yet to be looked into and needs a big push from the government.The writer is a practising Chartered Accountant and an expert in GST.