The GST collections are falling — the rate of annual growth was negative in both September and October — but that doesn’t seem to make the authorities any stricter in enforcing compliance and closing the avenues for evasion.
The goods and services tax collections are falling — the rate of annual growth was negative in both September and October — but that doesn’t seem to make the authorities any stricter in enforcing compliance and closing the avenues for evasion.
On Thursday, the government not only extended yet again the due dates for filing Form GSTR-9 (annual return) and Form GSTR-9C (reconciliation statement) by one and three months, respectively, to December 31 and March 31, but also undermined the utility of these returns by virtually removing its crucial anti-evasion features.
As the GSTR-9 and GSTR-9C forms have now been ‘simplified’, taxpayers won’t require to provide the split of input tax credit availed on inputs, input services and capital goods. Also, they won’t need to provide HSN-level information of outputs or inputs, etc, for 2017-18 and 2018-19.
The changes are attributed to the government’s recognition of the ‘challenges’ faced by taxpayers in furnishing these details, but experts point out that with the latest relaxations, the authorities would find it difficult to match the invoices of buyers and suppliers to check evasion, even after the annual returns are filed.
GST was introduced in June 2017, but a proper invoices matching system hasn’t been out in place yet. It was expected that GSTR-9 would be the answer to the issue, as complete details of every transaction conducted through the year were to be furnished in it.
Forget annual returns, only two-thirds of the 11 million businesses registered under GST file even the monthly returns at present.
Earlier, the due date for filing GSTR-9 was extended from August 31, 2018, to November 30, 2019. The annual return was initially conceived, included an annual summary of the supplies made, tax paid on such supplies, ITC claimed, ineligible credits, demands and refunds, besides the HSN on outward and inward supplies. It was to help the taxman reconcile the data in a variety of ways to check evasion.
As reported by FE earlier, GST collections in October — concerning mostly September transactions — came in at Rs. 95,380 crore, 5.29% lower than in the year-ago month. The September GST collections were just Rs. 91,916 crore, a 19-month low, and these were 2.7% lower than the year-ago month. There was only one more occasion since GST’s April 2017 launch the collection for any month declined from the year-ago month — in August 2018.
The low October GST mop-up was despite the fact that as the month that follows the middle point of the fiscal, October is believed to be a high-revenue month for the government, rivalled only by April, that follows the end of fiscal. Collections in October 2018 was Rs. 1,00,710 crore and there were only six more months when the overall GST revenue crossed the Rs. 1-lakh-crore threshold.
Apart from the economic slowdown, the inability of the authorities to check a rising trend of evasion is also believed to be impacting the revenue collections.
For the Centre, the anaemic GST collections mean its central GST (CGST) revenue could fall considerably short, impacting the budget maths.
While the monthly average CGST revenue to reach the Budget estimate for FY20 is Rs. 43,833 crore, the collections thus far has been Rs. 40,829 crore per month. That is a shortfall of a neat Rs. 3,000 crore per month or Rs. 36,000 crore a year.
The state governments are also feeling the pinch as the requirement of compensation is rising and the compensation cess kitty is shrinking.
In the April-October period, the average monthly compensation cess kitty was Rs. 8,115 crore, which would mean a shortfall of over Rs. 1.1 lakh crore on an anualised basis. Of course, going by the past trend, some Rs. 60,000 crore of the unallocated IGST funds might finally get distributed among the states towards the end of year, reducing the shortfall to that extent.