With a rise in collections from the goods and services tax (GST) in recent months, the Central Board of Indirect Taxes and Customs (CBIC) is betting on both technology and audit tools to enlarge the tax base and improve compliance.
Apart from this, it has also begun to use data analytics to ensure people pay their tax dues, said V Rama Mathew, member, CBIC. “We have five years’ worth of data right now. We are now looking at enabling data analytics to see the patterns and the gaps. For instance, we are looking to identify people who have supposedly received goods, but have not shown any evidence of having used those goods,” she said.
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The board is also looking at simplification, integration and streamlining of processes for return filing and rectification to make compliance easier for taxpayers. “A lot of people who didn’t bother to register for GST or who struggled to register because of the compliance effort and high cost are now finding that they can do it themselves. It’s a simple process,” Mathew said.
The CBIC has found a shortfall of Rs 22,000 crore through GST audits so far. While Mathew declined to give an estimate of the number of people who will enter the GST taxpayer base or the additional revenue to be generated from the measures, she noted that traditionally, 2% to 3% of the revenue is normally recovered through investigative tools. The board has, however, stopped prescribing such a target, she added.
Gross GST collections were Rs 1.56 trillion in January 2023, the second highest mop-up ever. A recovery in economic activities and the impact of high inflation have boosted collections. The finance ministry had, however, highlighted that the government has also made various efforts to increase the tax base and improve compliance.
The Union Budget 2023-24 expects GST collections to remain robust. It has pegged revenue from the indirect tax levy to increase by nearly 13% to Rs 9.6 trillion in FY24 from the revised estimate of Rs 8.5 trillion this fiscal. “As the tax collection from GST stabilises, it is likely to give a boost to the indirect tax collection, with an estimated GST buoyancy of 1.14 in the ensuing year,” said the Budget document.
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The number of GST taxpayers has increased to over 14 million in 2022 from nearly 7 million in 2017.
The Economic Survey had attributed the improvement in GST collections to the combined effect of the rapid economic recovery post-pandemic, the nationwide drive against GST evaders and fake bills, along with many systemic changes introduced recently, and various rate rationalisation measures undertaken by the GST Council to correct the inverted duty structure.