India: GST collection in Nov 17 seen at lower than INR830bn in Oct 17; errant taxpayers face crackdown

  • Saddled with a massive amount of unverified input tax credit (ITC) claims from the taxpayers, the government fears that the goods and services tax (GST) revenue for Nov 17 could be lower than INR800bn.
  • Government officials told FE that deferment in filing comprehensive triplicate forms (GSTR-1, 2 and 3) has left the government with no viable option to check veracity of taxes paid and credits claimed.
  • The finance secretary met revenue department officials from states and Centre on 9 Dec 17 to analyse the GST collection trend to plug leakages following the reduction in Oct 17 mop-up to around INR830bn. This was much lower than the average collection in 3Q17 at over INR900bn.
  • Additionally, officials said there was a danger that the decline in revenue collection could continue in the months after Nov 17 until the filing of triplicate forms starts in Apr 18.
  • At the time of GST launch in Jul 17, the taxpayers were required to file triplicate forms which were supposed to capture the transactions of a businesses and the same could be electronically verified with other dealers in the supply chain.
  • However, due to technical glitches suffered by the GST Network, the IT backbone of the new tax regime, the government deferred filing of these return forms till Mar 17. Meanwhile, taxpayers were allowed to file GSTR-3B, a summary return with self-assessed tax liability and credit claims.
  • While the government has been trying to look at alternative to verify the legitimacy of claims filed in the one-page GSTR-3B data by collecting data manually, the officials say it was not possible to do so for nearly 9 million assessees with the available resources.
  • Despite the cumbersome process, which has been made further onerous as taxpayers aren’t obliged to share such information to this informal request, the tax officials have been instructed to continue to collect detailed data on central GST, state GST, integrated GST and compensation cess paid by assessees against pre-GST revenue of the corresponding period.
  • In cases where it is possible, the officials would also take VAT and CST revenue into account. The tax officials would meet soon to devise a definitive plan for tackling the current blind-spot. In the meanwhile, the officials said that the current approach was too blunt and was unlikely to yield any substantial breakthrough.

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