The roll-out of GST has unified the multiple central and state taxes on goods and services to a great extent and made credit for input taxes available through the value chain, but has not simplified the tax compliance regime while the experience so far has also been that of slowdown in tax revenue growth, the Comptroller and Auditor General (CAG) said.
“The system of payment and settlement of tax that was envisaged for GST was based on one hundred per cent invoice-matching and availment of input tax credit (ITC), as well as settlement of I-GST on the basis of invoice-matching. Neither is possible as of now, as an invoice-matching system has not kicked-in,” the top auditor said in a report tabled in Parliament on Tuesday.
The CAG report said that the complexity of return mechanism and the technical glitches of the e-tax system led to roll-back of invoice-matching, rendering the whole system prone to ITC frauds. “The deficiencies in the GST system also point to a serious lack of coordination between the executive and the developers (of GSTN, the IT platform).”
The CAG also pointed out that the Centre’s revenue from taxes on goods and services subsumed in GST registered a 10 per cent decline in 2017-18 compared to the previous year. GST came into effect from July 2017. So, the overall growth of indirect taxes collected by the Centre slowed from 21.3 per cent in 2016017 to 5.8 per cent in 20170-18, the auditor noted (in 2018-19, the growth was even lower at 2.9 per cent).
In fact, even as the GST expanded the relevant tax base from just over 62 lakh to 1.23 crore, the GST collections in 2018-19 was short of the initial target (budget estimate) by Rs 1.6 lakh crore or a fifth. Apart from the aggressive target set, this was also due to the series of tax cuts since the new tax was launched and also various concessions being given to composition dealers. —FE
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