For the first time, the GST collection in the month of April surpassed a whopping Rs 1 lakh crore mark, which Finance Minister Arun Jaitley dubbed "a landmark achievement", but Narendra Modi's worry is far from over!
For the first time, the GST collection in the month of April surpassed a whopping Rs 1 lakh crore mark, which Finance Minister Arun Jaitley dubbed “a landmark achievement”. However, analysts are still concerned over low tax compliance. The GST tax compliance has stayed around 69% for the past few months. The compliance showed a little improvement in the month of March as it increased to 69.5% until April 30, analysts say that the Narendra Modi government needs better taxpayer numbers to meet its FY19 target.
“The gradual increase in the percentage of GST return filers while being encouraging, still is quite low as it appears that 30% of taxpayers are not filing returns,” MS Mani, Delloit India told FE Online. He said that 70% GST returns filers also include those filing nil returns.
“It is now essential to allow the reform to stabilise and not keep making constant changes as simplification and stability are essential attributes of increased tax compliance,” he added. The GST Council is scheduled to meet on May 4 and will likely discuss simplification of tax returns, a long-pending agenda. Tax experts have opined that frequent changes in the GST rules and rates were creating confusion among businessmen while filing returns.
In the month of March, the tax mop-up also included a total tax of Rs 579 crore from the composition dealers, who filed their quarterly return (GSTR 4). Out of 19.31 lakh composition dealers, 11.47 lakh have filed their return, which turns out to be only 59%. Arun Jaitley had expressed worry over low compliance from composition dealers and even said that these dealers may have been “underreporting their income.”
Even after nine months, GST Network (GSTN) continues to have teething troubles, which could be another reason for low compliance. “There are still a few registered assesse (taxpayers) who are unable to file GST return on account of either technical glitches or resistance in acceptance of technology,” Sandeep Chilana, Partner, Shardul Amarchand Mangaldas told FE Online. A Ficci survey showed that businessmen are facing problems such as delayed reflection of updated data as well as payments, delays in process of input credit set-offs and
lack of provision to modify or revise errors.
The Rs 1,03,458 crore collection in April, pushed the average monthly collection to a comfortable Rs 89,885 crore but still below the target of Rs 92,000 crore. Sonal Verma of Nomura told CNBC-TV18 that the GST collection was lower than expected when “adjusted for seasonality”, and there is a “need for better tax compliance to ensure target”. With E-way bill implementation, analysts hope that tax evasion would come down and help collections to stabilise.