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Economy to gain steep ascent as GST revenue crosses trillion mark at beginning of FY 2018-19
It should be born in mind that persistence always yields the desired outcome if it’s for good, and that past performance is not an indication of future prospects. This is very true in case of GST regime. Notwithstanding the fact that there have been some testing complications with respect to provisions under GST, including refunds of Input credit and provisional credit, the thing that prompts exhilaration is that the GST authorities have reported an instant boom in the tax revenue.
The nation is all set to attain remarkable fiscal consolidation as overall GST collections have now crossed an astonishing figure of INR 1.03 trillion in the month of April. This is indeed a sensation for the whole nation as it is the first time that monthly GST revenue has hit a trillion mark. Indeed, this dynamic tax collection goes to the credit of wise and steadfast entrepreneurs who have gone through the GST registration procedure and have exhibited continual compliance with GST Laws. More astoundingly, the portion of CGST out of the total collection amounts to INR 18.65 thousand crores. The financial records of past few 7 months of the GST regime reveal an average GST collection at the rate of INR 90,000 crore, which is still on the rise. This has contradicted the fears of many who had expected a steep slump in GST revenue throughout this fiscal year.
#1. What has been the reason behind the constant rise in GST Revenue?
There’s no doubt that the GST era had a rickety beginning in India. A large chunk of taxpayers was edgy while migrating to the new tax regime. Many of them were initially noncompliant while GST return filing. However, there has been a gradual improvement in this regard. In the recent months, the level of compliance and tax buoyancy has increased significantly as even those tax assessees who come under composition scheme have duly paid GST and filed their quarterly returns.
#2. What is the role of government policy measures in stabilizing the revenue?
Although the preliminary snags like cumbersome procedure, technical glitches and tight deadlines had prima facie intimidated the taxpayers, the policy reforms introduced in the subsequent GST meetings have worked to the benefit of the taxpayers. In this regard, the reinforcing of E-Waybill mechanism is worth mentioning as this will truly deter anti-tax-evasion and will check under-reporting of transactions in the books of accounts. The total tax collection since the beginning of GST registration process in India has stood at INR 7.14 lakh crores. This includes-
- INR 1.19 lakh crore of CGST,
- INR 1.72 lakh crore of SGST and
- INR 3.66 lakh crore of IGST.
Further, the average monthly tax collections have stood at INR 90-95 thousand crores.
#3. What are the future prospects regarding the GST revenue?
Very importantly, the GST council has set a target of GST collections of INR 12 trillion for FY 2018-19. As per the recent data, country’s nominal GDP is to ascend by 12%, and government’s action plan seems to be in line with it. Surely, this will lead to the reduction in the tax burden on the taxpayers.
#4. What are the current challenges that need to be addressed?
To be very clear, tax compliance still remains a pain in the neck of the tax assessors. No doubt, the tax collections are stabilising with around 1.14 million composition dealers out of the total 1.93 million having duly met quarterly GST return filing procedure and having paid a huge GST amount of INR 579 crore. Despite these good signs, the total compliance rate stands at 69.5%, as only 6.04 million taxpayers out of 8.7 million have duly filed GSTR-3B for March 2018.
#5. How will the government retain the tax buoyancy?
The government indeed has proper policy measures to be implemented to upkeep this progressive trend. For instance, the GST department has recently proposed the fusion model of GST return filing procedure, wherein the best features of the 2 previous models will be inculcated as to easily grant input credit to the traders. Other measures such as invoice matching and reverse charge will provide much more boost to the GST collections.
If you need any guidance regarding GST registration process in India or GST return filing online, feel free to contact us at 8881-069-069.
