Centre plans GST tweaks to boost collections
The government on Thursday appointed a committee to recommend measures to augment Goods and Services Tax (GST) collections, check evasion and make the new regime simpler for ease of compliance that would eventually help in expanding the tax base.
“With the approval of the competent authority, it has been decided that a committee of officers be constituted to suggest measures to augment GST revenue,” an order issued by the GST Council secretariat said.
The GST collection in September fell 2.67% to Rs 91,916 crore compared to the same period last year, driven by the ongoing consumption slowdown. September’s GST collections are the lowest since February 2018. The tax collection in August 2019 was Rs 98,202 crore.
“The committee should consider a wide range of reforms so that a comprehensive list of suggestions may emerge,” the order said.
The committee has also been asked to look into systemic changes, including checks and balances to prevent misuse, it said. One of the terms of reference is for the committee to suggest measures to improve voluntary compliance. Its mandate is also to suggest measures to expand the tax base and to improve compliance monitoring and anti-evasion measures using better data analytics.
The panel has members from both the Centre and states. GST commissioners of Maharashtra, Tamil Nadu, Uttar Pradesh, West Bengal and Punjab are members of the committee. The central government is represented by principal commissioner and joint secretaries, among others.
“The committee shall submit its first report within 15 days to the GST Council secretariat,” the order said.
According to a government official familiar with the matter, the recommendations of the committee would be processed expeditiously so that it could be discussed at the next council meeting in November and implemented soon after. The decision to review rules and regulations pertaining to GST was felt after revenue collections dropped to a 19-month low last month, the official said, requesting anonymity.
Experts cited the economic slowdown as the reason for falling GST collections. The lower collections are mainly due to lower gross domestic product (GDP) growth numbers seen recently. As GST is a transaction tax, it is immediately impacted by any decline in economic activity, experts said. India’s annual GDP growth in the quarter ended June 2019 was 5%, the lowest in 25 quarters. It also marked the fifth consecutive quarter of slowing growth in the Indian economy.
“The government needs to focus on a consolidated rate rationalisation. The piecemeal rationalisation process over the last couple of years has resulted in more than six tax slabs,” Mekhla Anand, partner, Cyril Amarchand Mangaldas, said. “Additionally, aspects such as eligibility of input tax credit, export mechanisms and anti-profiteering need to be reviewed conceptually so as to ensure ease of business. On the procedural front, the data requirements as well as the interface for filing returns requires tremendous simplification to ensure a greater degree of compliance.”