Revenue from ‘Gabbar Singh Tax’ declines but more rate cuts expected

In written replies to Parliament, the Government has conceded that it was hoping to collect between December and March almost as much as it had collected in eight months between April and November last year from GST.

While the Government’s target is to mop up ₹11.16 lakh Crore as indirect tax collection in the current fiscal, it had managed to collect only ₹6.12 lakh Crore in the first eight months.

Minister of State for finance, Shiv Pratap Shukla, informed the Lok Sabha that the number of registered businesses not filing GST Returns has gone up from 10.56% in November, 2017 to over 28% in November, 2018.

The drastic decline in GST compliance rate has become a major headache for the Modi government with fiscal deficit steeping deeper in trouble.

But the GST Council, which is scheduled to meet on Thursday, January 10, is widely expected to offer more rate cuts and more sops in view of the general election.

IANS reported in December last year that India's budgetary fiscal deficit for the April-November period at ₹7.17 lakh crore had exceeded the target for the full fiscal, accounting for 114.8% of the budgeted target of ₹6.24 lakh crore, mainly owing to slow revenue growth during the period under consideration.

Even though Modi government has time and again changed the “declared goals” of the GST regime since it was launched on July 2017, it is facing scathing criticism for faulty roll out of ‘grossly scary tax’.

Maintaining that the government has also detected cases wherein fake invoices are being used to claim input tax credit, Shukla stated in response to a Lok Sabha question on Friday that the authorities are working on hunting these missing taxpayers.

In 2018-19, according to the Finance Ministry reply, upto December, 499 cases of fake invoices used for claiming input tax credit have been detected involving amount of ₹3,894.94 crore as against detection of 4 cases involving ₹9.75 crore in July 2017-March 2018.

The government collected ₹8,71,043 crore as GST revenue in April-December, the first nine months of this financial year, and is still short of the overall target by ₹4.77 lakh crore.

As the tax filers also include traders, manufacturers and restaurants pay a low nominal tax rate under the composition scheme, the low compliance rate could be one of the possible roadblocks in extending the composition scheme to service providers. The proposal is slated to be discussed in the upcoming GST council meeting slated to be held on January 10.