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How GST collections can be bumped up

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The implementation of the Goods and Services Tax is likely to be showcased as one of the biggest achievements of the current NDA government in the upcoming general elections. To give the Centre its due, shifting all the States to the new indirect tax regime, where they lose control over the levying of a bulk of the indirect taxes, was no mean task.

The bureaucratic machinery also rose to the challenge, working round the clock, to migrate the mammoth indirect taxpayer base to the new system. After complaining loudly in the first few months, consumers too have largely accepted the new taxes; some deft adjustment of rates by the GST Council helped.

But that does not mean all is well with the new system. In a bid to ease the transition process, the GST Council has rolled back many of the anti-tax evasion provisions that were built in to the GST structure. The initial zeal shown by businesses in collecting GST appears to be slackening and tax evasion is ubiquitous in our everyday dealings, especially in B2C transactions, in smaller retail outlets. Lower return filing numbers also indicate that the new system could be resulting in higher revenue leakage.

It’s therefore not surprising that monthly GST collections have been faltering. Numbers show that the shortfall in GST collections so far in FY19 may be more than ₹1 lakh crore. This could have an adverse effect on the fiscal deficit, unless collections in the next few months move higher to bridge this gap.

At surface-level, monthly GST collection numbers put out by the Centre appear healthy. Between April and November 2018, monthly revenue averaged ₹95,358 crore, above the average of ₹89,885 crore........

© Business Line