How could Streamlining GST Regulations boost the Tax Collections?

Surprisingly, after the implementation of the Goods and Services Tax Act the revenue collection has been on quite a roller-coaster ride. When was the last time that you heard about an impressive rise in GST revenue collections? Due to multiple compliance issues, the revenues have also been suffering. On the other hand, the government denies all the blames for the fall in the revenue collections. Rather the government proposed that the decline in the revenue collections is temporary and it will increase further. But what will make that happen?

Facilitating MSMEs

Initially, the implementation of GST felt like the government cutting the ground from under the business’s feet, and especially the small ones. But soon after the government started making necessary changes in the regime, the registrants started pouring in large numbers. Although the people have been expecting the government to deliver the goods but getting the harsh thrashes of the complex GST regulations instead. However, the regime finally seems to be entering the stabilization phase.

  • The return forms will be made simpler, especially GSTR3B.
  • For the ease of the tax calculations, the tax percentages of 12% and 18% will be combined into one.
  • The nil-return filers to get relief from filing monthly returns. They’d file returns bi-annually instead.

As per the current collection records, the revenue for February dropped by a few thousand crores. Only 69% of the taxpayers filed returns. However, the collection for the month of January was INR 88,929 crores. And the reason that the collections dipped has everything to do with the current phase that the regime is in.

Steering towards simplification

The mismatch of the invoices and the incorrect tax liability has made the government take the control in order to:

  • Identify the main cause of such a big blunder.
  • Implement pertinent measures to overcome the loss.

After few frequent checks, the reason behind the reduced collections turned out to be the complexity and unawareness. Previously, the taxpayers were required to file returns thrice in a month and 37 times in an entire financial year. And as India GST regulations are complex, the multiplicity of the return filing and taxes made the businesses suffer and ultimately the revenue collections.

Such difficulties in the Goods and Services Tax Act ruled-out the possibility of on-time ITC claims credit to the businesses. In addition to the input tax credit, more than INR 150 crores of ITC claims are pending with the government. The dilemma of the exporters of being helpless in doing business due to the lack of the capital, made Central Board of Excise and Customs (CBEC) evaluate claims manually.

Above all

It has become a commercial reality that the businesses are highly getting involved in making fake entries for the sales and purchases. Such kind of tax evasion will shrink the revenue allowance for the sectors like infrastructure, health, education etc. The government would have to put out all stops to end evasion practices and ensure a healthy taxation in India.

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