Skip to main content

Fear of revenue loss abates as GST collections gain momentum

Fear of revenue loss abates as GST collections gain momentum
States are steadily improving GST collections aided by relaxations in deadline, waiver of late payment fee and steps to encourage compliance, shows GST Council data.The initial revenue shock following the rollout of the goods and services tax (GST) seems to have abated, with states steadily improving collections aided by relaxations in deadline, waiver of late payment fee and steps to encourage compliance, showed data from the GST Council.
Average shortfall in GST revenue collected by states narrowed to 24% in September and further to 17.6% in October from a high of 28.4% in August, supporting the optimism of state finance ministers that revenues will stabilize further in coming months. Monthly GST receipts of states relate to sales in the previous month
GST, aimed at creating a common nationwide market by scrapping a web of local taxes, has seen a series of tweaks since it was implemented on 1 July, with the most comprehensive changes announced after a GST Council meeting on 10 November when it slamshed taxes on as many as 200 items to ease the burden on businesses, relaxed penalties and made it easier for small businesses to comply.
The changes are expected to cost the Union and state governments Rs20,000 crore a year.“The tax rate cuts may cause a revenue shortfall initially, but if the demand for such products as well as compliance by businesses pick up, it could help to offset the revenue loss over a period ,” said R. Muralidharan, senior director, Deloitte India.
But even before the latest tax cuts were announced, the combined central and state GST revenues, including cess, recovered from the blip seen in August.In October, the combined GST revenue was Rs95,131 crore, up more than 2% from the preceding month.
State GST receipts rebounded with a growth of over 44% in September from the previous month and increased further by 8.5% in October to Rs35,634 crore. The total state GST target is roughly Rs43,000 crore a month.
Delhi tops the list of states and Union territories with the least revenue shortfall, followed by Maharashtra, Andhra Pradesh, Tamil Nadu, Telangana, Kerala, Haryana and Gujarat.The problem of revenue shortfall is acute in the case of Puducherry, Uttarakhand, Himachal Pradesh, Chhattisgarh, Bihar and Goa.
The waning effects of the slowdown in production because of uncertainties related to GST introduction in July is aiding the improvement in revenue growth. Economists say the slow down in economic growth seen in the June quarter—to a three-year-low of 5.7%—has already bottomed out.
Another reason for revenue improvement in September is the remittances from small businesses which are required to file returns and pay taxes on a quarterly basis under a special window for them called the composition scheme.
GST proceeds do not include tax collection from items such as select fuels, liquor, electricity and land that are kept outside the indirect tax. Basic customs duty levied by the Union government is also outside of GST.
The indirect tax reform held the promise of widening the tax base and make taxation more transparent but the sophisticated IT-driven processing of returns envisaged in GST has made compliance tough for many small businesses, which prompted the GST Council to continue some pre-GST era schemes for exporters and suspend the rigorous matching of invoices from suppliers and buyers till the end of the current fiscal year.
At its Friday meeting, the council also reduced the late payment fee for those filing “nil tax” return to Rs20 from Rs200 earlier. For the July-September period, the fee was waived earlier.
A state finance minister, who spoke on condition of anonymity, said that the major jump in the tax base that will be visible in the near future will be in direct taxes as more small businesses and traders start disclosing their revenue and pay income tax.
The Mint, New Delhi, 13th November 2017

Comments

Popular posts from this blog

New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

  Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes   The income tax slabs under the new income tax regime will now be as follows: Rs 0 to Rs 3 lakh - 0% tax rate Rs 3 lakh to 6 lakh - 5% Rs 6 lakh to 9 lakh - 10% Rs 9 lakh to Rs 12 lakh - 15% Rs 12 lakh to Rs 15 lakh - 20% Above Rs 15 lakh - 30%   The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)   Income tax slabs under new tax regime Income tax rates under new tax regime O to Rs 3 lakh 0 Rs 3 lakh to Rs 6 lakh 5% Rs 6

Jaitley plans to cut MSME tax rate to 25%

Income tax for companies with annual turnover up to ?50 crore has been reduced to 25% from 30% in order to make Micro, Small and Medium Enterprises (MSME) companies more viable and also to encourage firms to migrate to a company format. This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns of lower taxation and make MSME sector more competitive as compared with large companies. However, bigger firms have shown their disappointment since the proposal for reducing tax rates was to make Indian firms competitive globally and it is the large firms that are competing globally. The Finance Minister foregone revenue estimate of Rs 7,200 crore per annum for this for this measure. Besides, the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period. “It is not practical to rem

Don't forget to verify your income tax return in August: Here's the process

  An ITR return needs to be verified within 120 days of filing of tax return. Now that you have filed your income tax return, remember to verify it because your return filing process is not complete unless you do so. The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022. E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V. Taxpayers who filed returns by July 31, 2023 but forget to verify their tax returns, will get the following email from the tax department, as per ClearTax. If your ITR is not verified within 30 days of e-filing, it will be considered invalid, and may be liable to pay a Late Fee. Aadhaar OTP | EVC through bank account | EVC through Demat account | Sending duly signed ITR-V through s