As the declining GST collections continue to be a cause of worry for the tax authorities at the central and state levels, anti-evasion measures are being strengthened.
As the declining GST collections continue to be a cause of worry for the tax authorities at the central and state levels, anti-evasion measures are being strengthened. The government on Thursday set up a committee of officers to suggest measures to augment GST revenue collections and administration and asked it to submit a report within 15 days to the GST Council Secretariat.
“The committee should consider a wide range of reforms so that a comprehensive list of suggestions may emerge,” an official order said, adding that the panel’s terms of reference “include making suggestions about systemic changes”, including checks and balances to prevent misuse and steps to improve voluntary compliance.
Separately, the government also amended GST rules to ensure that businesses can’t claim entire input tax credit (ITC) if their suppliers had failed to file returns and upload invoices. This is likely to force businesses to follow up more rigorously with non-compliant suppliers, and bring those of the 1.2 crore GST registrants and businesses still outside the tax network to be part of the system to stay in business.
According to the amendment, ITC with respect to invoices or debit notes which have not been uploaded can only be claimed to the extent of 20% of the eligible credit, for which invoices from suppliers are reflected in the system.
If ITC available for a given month (as per books) is Rs 1,500 and of this, certain vendors with respect to which input tax credit involved is, say, Rs 500 and they have not filed their GSTR-1, the buyer can now avail ITC only to the extent of Rs 200 (i.e. 20% of Rs 1,000),” Pritam Mahure, a chartered accountant, explained.
As a result of this amendment, regular matching of ITC with the details available in GSTR-2A will become necessary, Rajat Mohan, senior partner at AMRG & Associates, said. He added that follow-up with non-compliant suppliers would be needed on a regular basis now.
Additionally, the government also changed rules to classify summary return GSTR-3B as a ‘return’ with retrospective effect from July 1, 2017. Abhishek Jain, tax partner at EY said: “The retrospective amendment of GSTR 3B being treated as a return under Section 39 would open up Pandora’s box for businesses who were planning to avail credits for FY 17-18 till the filing of annual return. Separately, with another ten days remaining for filing of GSTR-3B for the month of September 2019, companies would now on priority need to execute reconciliations for FY18-19 to avail missed credits, if any.”
The committee on GST revenue has also been tasked to give inputs on how to expand the tax base. “Policy measures and relevant changes needed in the law, improved compliance monitoring and anti-evasion measures using better data analytics and better administrative coordination also form part of its terms of reference,” the order said.