GST increases
Many may not be aware of it, but the idea of implementing GST in India was put forward under the leadership of the late Shri Atal Bihari Vajpayee. He appointed an Authorized Committee (EC) in the year 2000, and the committee was charged with drafting the GST laws. Their combined efforts and those of several others finally paid off in the year 2017 with the adoption of the Goods and Services Tax (GST) Act 2017. After July 1, 2017, GST has been fully operational and it appears have restored order to the tax system in India.
GST is basically an indirect tax that replaces most indirect taxes that are imposed at various stages of production of goods and services. In this way, the GST becomes an indirect tax for the entire country. GST basically aims to eliminate the cascading effect of taxes. The cascade effect is basically the addition and accumulation of taxes at each level of production of a good/service.
GST income and related issues
The government has gone so far as to say that there has been voluntary compliance and a huge response to the GST after its initial stages, leading to an increase in the tax base from Rs 60 lakh crore to Rs 1.10 crore. This sounds great for the government, but only on paper. The increase in the tax base can be credited to the inclusion of many sectors in the GST that were previously excluded. The integration and application of the GST has surely helped taxpayers to file their taxes and comply more smoothly.
However, the current figures paint a picture of grim reality and realization for the government. The government had offered to provide compensation for 5 years due to the losses suffered by the state government due to the implementation of the GST, a good move by the central government that helped state governments consolidate the law down to grassroots levels.
However, recent performances and evaluations have left the central government dissatisfied with the low revenue figures of the GST scheme. Bi-monthly compensation for the months of June and July 2018 increased to 3.8 times that of the months of March and April 2018. The central government is also consistently falling short of its stated target of 1 lakh crore. The government, however, presents a strong front and claims that it has eliminated implementation errors and is also “better equipped to deal with defaulters”, which sounds like an empty statement considering current events. In this sense, the Central Government is formulating strategies and expects the state governments to help identify the flaws within the current system.
THE STEPS OF RECOVERY
A senior official also told the PTI (Press Trust of India) that the government needs to formulate a strategy to shore up GST revenue. The source also laments the lack of an established pattern for paying compensation to individual states.
The government, however, does not just sit quietly and watch as they fail to raise adequate revenue. GST Return is set to undergo sweeping changes in the coming times.
Here are some of the reforms the government is planning:
· Deploy anti-invasion measures focused on the top 30 taxpayers. The data analysis will be used to profile the top 30 taxpayers and look at their tax payments before and after the implementation of the GST.
Assure businesses of all kinds that they would try to put a stop to business intrusion.
Reform the current 5 GST sections to reduce the sections to just two.