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GST receipts in August raise questions about compliance

LiveMint logoLiveMint 26-09-2017 Gireesh Chandra Prasad

New Delhi: Union and state governments collected Rs90,669 crore as goods and service tax (GST) in August, 3.6% less than what was collected in July, the first month of the indirect tax reform, as businesses and traders attempted to settle down in the new system despite technology hiccups.

A finance ministry statement on Tuesday said these receipts do not include taxes from over a million small assessees who have opted for a liberal quarterly tax payment system.

Only a little more than half of the 6.8 million assessees who were required to remit taxes and file returns met the deadline, said the statement. It implies that either the actual receipts may go up further as many who missed the last date opt for paying taxes with interest, or many taxpayers who got migrated from the earlier tax system to GST are not required to pay.

Businesses with at least Rs20 lakh turnover are required to pay GST, a threshold higher than the Rs10 lakh that existed earlier for service tax and Rs5-10 lakh that existed for value added tax (VAT). An automatic migration of all taxpayers from the earlier system to the new one would mean that some of the registered GST payers may eventually forfeit their registration since they do not reach the Rs20 lakh threshold.

Some experts said the low level of compliance needs to be studied. Abhishek A Rastogi, a partner at law firm Khaitan & Co. called it an “alarming fact.” “The government should go to the root cause and analyse whether these assesses are facing some genuine problems or they have been migrated automatically and are not required to comply,” he said.

In August, central government’s share of GST stood at Rs14,402 crore while states collected Rs21,067 crore. Integrated GST or IGST which is collected on inter-state commerce and imports stood at Rs47,377 crore. Of this, imports accounted for Rs23,180 crore. “The above figures obviously do not include the GST to be paid by 10.24 lakh assessees who have opted for the composition scheme (meant for small taxpayers). Additionally, there are still a number of assessees who have not filed their return either for July or August, 2017,” said the ministry statement.

Abhishek Jain, tax partner at consulting firm EY India, said it was too early to hazard a guess on overall GST collections as many taxpayers have still not paid GST. Besides, there is inconsistency in collections because of transitional credit and exporters not being able to claim refund of GST. “Things would settle down only in the next few months,” said Jain.

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