Moderate the tax rate and broaden the tax base’ is the mantra for behind any robust tax system. In the poll season, government actions will be linked to politics. The time has come to move beyond politics, and understand long-term economics.
Implementation of GST was a herculean task, and, globally, ruling dispensations have generally not won elections after implementing GST. Yet, the present government was bold enough to implement GST in the larger public interest. Before concluding, it becomes imperative to analyse how the country has progressed in the last 21 months before commenting on the collections of March 2019.
Let us start with the statutory provisions. The courts throughout the country witnessed large number of interesting writs filed by petitioners all over the country to challenge the constitutional validity of various provisions. However, it should be noted that the GST Council has frequently come out with various amendments to address the needs of industry in such a dynamic environment. With the strong judicial system in the country, the courts were faster than the amendments proposed by the GST Council. As a corollary, the issues faced by industry witnessed pragmatic results. Another related aspect was of better compliance, and the GST Council did not hesitate to make procedural changes related to compliance, extend deadlines and increase threshold limits, thereby addressing the needs and popular demands of the taxpayer. The third aspect was with respect to rate rationalisation and the new taxation system witnessed large number of rate changes.
The moot point, based on the above three factors, is whether GST was implemented in haste and whether more thought should have gone into it before implementation. For any taxation system, such a large number of changes may not be a good sign, but we can’t ignore the diversity that our country has and, accordingly, timely benefit to the industry can’t be ignored inspite of the hardship caused by multiple changes. As every action has an equal and opposite reaction, the rate reduction was followed by anti-profiteering scrutinise but again in the larger public interest.
Moving on to the numbers—the collection of March 2019 is estimated to be at the record high of around `106,000 crore. There is not even an iota of doubt that this number is low by any standard. However, an important angle is whether this collection figure includes the tax credit which the businesses have at the year end. There could have been instances wherein due to the change prescribed for the sequencing of credit utilisation, there is large balance of SGST/ CGST credit which remains unutilised and the output tax of March has been paid in cash. In such a scenario, the collections for the subsequent tax periods would reduce and, hence, the numbers of the subsequent period will be the real reflection of the improved tax collection.
It is generally observed that there is tax collection pressure on the tax authorities even in the month of March, and there is a possibility that the collection number has gone up due to reduced sanction of refunds or payment of taxes by cash upon sincere request from the tax authorities. The delay in sanctioning of refunds is never a good sign for any economy and, hence, the government should start the concept of assessing the commissionerates by the ‘tax throughput’ concept. This concept recognises the efforts of the officers by not only tax collected but also refunds sanctioned. The government should think of amnesty schemes so that the genuine tax defaulters can come forward and clear the dues. Besides, the high direct and indirect tax payers should be given acknowledgement and priority—perhaps something like silver, gold, platinum and titanium status with various time saving priorities. This will certainly encourage willingness for tax payment.
Overall, the credit for the improved GST collection and better compliance should certainly go to the GST Council, and each of the stakeholder, including the revenue officers who have worked tirelessly for the improved taxation system. While the journey has been bumpy for both the taxpayers and the tax collectors, the generations of business ahead will certainly gain from the gutsy approach of the government and the GST Council.
Published On : 05-04-2019
Source : Financial Express
