As compliance rate of tax filers, including composition scheme dealers, under Goods and Services Tax (GST) shows a declining trend, authorities are working on hunting these missing taxpayers.
The percentage of taxpayers who have not filed returns under GST has steadily increased over the last 12 months to over 28 per cent in November 2018 as against 10.56 per cent in November 2017, data shared by Minister of State for Finance Shiv Pratap Shukla in response to a Lok Sabha question on Friday showed.
The composition scheme fares along similar lines, with the percentage of filers who have not filed returns rising to 25.37 per cent in July-September 2018 as against 15.03 per cent in July-September 2017, the data showed.
Under the composition scheme, traders, manufacturers and restaurants pay a low nominal tax rate.
Numbers reflect drop in compliance rate of tax filers
Numbers issued by the Finance Ministry reflect that compliance rate of tax filers, including composition scheme dealers, showing a declining trend. Low compliance rate under the GST regime, combined with a number of of rate cuts, are evidently a cause of concerns for the government. Revenue collections under GST is already an area of worry, with Budget targets likely to be missed this year. The low compliance rate could be one of the possible roadblocks in extending the composition scheme to service providers.
On a question on whether the authorities are considering putting in place an extensive plan to hunt for these missing GST taxpayers, which includes visiting their premises, the MoS for Finance replied in the affirmative.
“The details of the non-filers of returns are regularly shared with the jurisdictional tax authorities and measures including inspection, visit of premises, search and seizure are being undertaken wherever required,” Shukla said in his written reply.
The government has also detected cases wherein fake invoices are being used to claim input tax credit.
In 2018-19, upto December, 499 cases of fake invoices used for claiming input tax credit have been detected involving amount of Rs 3,894.94 crore as against detection of 4 cases involving Rs 9.75 crore in July 2017-March 2018, the details in reply showed.
“The government is committed to increase the percentage of compliance by taxpayers under Goods and Services Tax. In this regard, an extensive outreach program has been carried out across the country to create awareness among traders, industry bodies and other stakeholders,” the minister said in his reply.
Further, effective enforcement measures are being undertaken to check cases of tax evasion and fake invoices,” it further said.
Low compliance rate coupled with a series of rate cuts under GST will translate into more revenue concerns for the government.
Revenue collections under GST are already a worry for the government, with the Budget targets likely to be missed this year. The government has collected Rs 8,71,043 crore as GST revenue in April-December, the first nine months of this financial year, and is still short of the overall target by Rs 4.77 lakh crore.
Government finances are already under strain, with government’s fiscal deficit for April-November period rising to Rs 7.17 lakh crore or 114.8 per cent of the full-year target of Rs 6.24 lakh crore. The low compliance rate could be one of the possible roadblocks in extending the composition scheme to service providers.
The proposal for extension of the scheme for small service providers will be discussed in the upcoming GST council meeting slated to be held on January 10.