Ahead of the Goods and Services Tax (GST) Council meeting within a month, Central Board of Indirect Taxes and Customs (CBIC) Chairman Vivek Johari said on Thursday that reform of the rate structure and rationalization of tax rates are important for improving revenue. Skill and exuberance.
GST collection has been consistently higher than the GDP growth rate in recent years, with monthly collection in FY22 surpassing Rs 1.25 trillion for six consecutive months till March, 2022. Monthly GST collection of 1.68 trillion rupees is the highest ever April (March transaction), largely reflecting the efficient plugging of tax evasion, a permanent shift of business in the formal sector of the economy and the impact of inflation.
The continued pace of higher GST receipts since July 2021 has resulted in an average GST of Rs 1.23 trillion in FY22, an increase of 29% per annum. Johri said the monthly GST revenue could average Rs 1.35 trillion in FY23, which is 10% more than the Rs 1.2 trillion in the year’s budget.
Stuck between conflicting objectives of increasing revenue collection and controlling runaway inflation, the GST Council could gradually increase the GST rate in the next few years, from one to four slabs at present, instead of one-time slabs. Under the GST compensation system, the state governments have promised 14% annual revenue growth in the first five years after the introduction of July 2017.
“In order to keep revenue growing, we have changed our strategy. One possible way to continue the revenue stream is to rationalize tax rates so that refunds and credits flow freely, reversing, ”Johri said at an event hosted by Ficci.
The government can focus on improving revenue through legal and administrative changes, including tightening enforcement to prevent leaks and better compliance.
“Legal changes were made to make it easier for taxpayers to file their returns, something they could not do at the top of the cove and improve the tax filing experience. We’ve improved our system on e-invoicing, which enables us to create tax-payment structures and credit systems. The automated population of returns and the interconnection of returns have helped to quickly-track credit and reduce compliance costs for taxpayers, ”Johri said.
“By implementing data triangulation with the Directorate General of Foreign Trade and the Income Tax Department, we have eliminated the risky taxpayers and suspended their registration. The perpetrators and those who were playing system gaming have been expelled, “said Johri.
Although the GST collection is likely to be exorbitant, he did not see too much contradiction in the FY23 in terms of excise and duty collection.