GST: On a strong wicket

NEW DELHI: This July marks six years of the implementation of the Goods and Services Tax (GST) regime, which heralded a uniform tax code for the whole nation. For the fourth time since the roll-out of the indirect tax structure, GST collections crossed the Rs 1.60 lakh crore mark, reflecting a surge of 12 per cent to over Rs 1.61 lakh crore in June 2023. The taxpayer base has also more than doubled from 63.9 lakh in 2017 to around 1.40 crore. From a monthly average of Rs 89,885 crore in its inception year, GST revenues have swelled to a new normal of Rs 1.50 lakh crore in the last financial year, achieving peak collections of Rs 1.87 lakh crore in April this year.

While e-way billing has made reconciliation convenient and reduced instances of cheating, fake invoicing figures shared by the government have raised alarm bells. Though the Central GST authoriity has tracked fake invoices to the tune of Rs 63,000 crore in three years from August 2020, it has managed to collect only about Rs 3,000 crore. Without any supply of goods or services or both, fake or non-genuine registrations have been used to bypass input tax credits via issuance of invoices.

The revenue loss to the government has been substantial with GST evasion detection in the last fiscal pegged at Rs 20,000 crore. As many as 60,000 entities were labelled risky, of which 50,000 were verified. Among them almost 25 per cent (about 12,500) have turned out to be fake. These episodes are rampant in the Delhi-Haryana-Rajasthan belt, while suspicious entities have been found in certain parts of Gujarat, Kolkata, Tamil Nadu, Noida, Assam, Telangana and Maharashtra as well.

It goes without saying that many challenges still persist and that even after six years, the GST backbone is not entirely glitch-free. Many businesses are finding the process of compliance as a daunting exercise, thanks to complexities in the return forms as well as ambiguity surrounding tax rates. The confusion surrounding the classifications of certain goods and services has also led to disputes and uncertainty. As far as the average businessperson is concerned, the tax filing period is still a headache.

The creation of a tribunal to address GST-related complaints remains unaddressed. So, many traders are compelled to pace the corridors of courtrooms, wasting precious time and resources. But then, one could counter that by saying even Europe could iron out its tax structure only over a period of 15 years.

Business leaders are also keen on drawing the government’s attention to the following issues, namely: beginning the taxation of petroleum crude, high speed diesel, petrol, natural gas and aviation turbine fuel under GST. Similarly, alcohol meant for human consumption, is something that many states have sought to bring under the ambit of GST. Apart from this, the inclusion of other levies such as electricity duty, stamp duty, within the indirect tax regime needs to be deliberated upon. Clarity has also been sought on the complex machinations of inter-branch services, cross-charge, taxation of online gaming activities, and of course, transactions involving cryptocurrency.

Stakeholders are hopeful that the 50th GST Council meeting that takes place on Tuesday, will open up dialogue on key areas such as the further rationalisation of tax rates (slabs); upgradation of the law to deal with an ever-evolving digital world, and streamlining the GST regime to build a robust, efficient tax framework for the nation.