India: FM looks into more GST tweaks to plug falling revenues

  • Alarmed by a nearly four-fold rise in GST compensation to states for Jun 18 and Jul 18, the Finance Ministry is crafting a strategy to shore up tax revenues and engaging with states to identify issues hindering their collections.
  • Finance Secretary Hasmukh Adhia has started meeting with GST officers, both from central and state tax departments, in the state capitals to understand issues plaguing the GST collections.
  • The Centre paid INR149bn to compensate states for revenue loss incurred in both months, a nearly four-fold jump compared to INR39bn for Apr 18 and May 18.
  • The reason for increased compensation also varied from state to state. For instance, in one of the cases, a state saw a huge outgo on account of VAT refund following a court verdict, the official added.
  • A discussion to shore up revenues has already happened with four states – Punjab, Himachal Pradesh, Puducherry and Jammu & Kashmir, while a dialogue with Bihar and Uttarakhand is slated to take place later this month.
  • The official said that one of the options being considered is stepping up anti-evasion measures with a focus on top 30 taxpayers, but added that the Centre will ensure that the fix to the problem will not be intrusive on businesses.
  • The Finance Ministry has targeted monthly GST collections to be INR1tr for FY19 but the actual mop up has fallen short of the target month after month.

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