Terming the issue of fake invoices under GST as a menace, the government on Monday warned of action against it, urging trade and industry to shun the unfair practices due to which the honest taxpayers suffer and result in loss of its tax revenues.
Minister of State for Finance and Corporate Affairs Anurag Thakur, speaking at an event to mark the second anniversary of GST, said the government intends to follow the policy of “imandaar trader se bair nahi, fake invoices walon ki khair nahi” (no enmity against any honest trader, but those generating fake invoices will not be spared).
“Government will take strict action against those involved in generating fake invoices. The menace of fake invoices needs to be checked as the actions of a few unscrupulous traders make the majority of honest taxpayers uncompetitive and cause loss to government revenue. The government is serious about curbing this menace,” he said.
Finance Minister Nirmala Sitharaman, in a written reply in the Lok Sabha on Monday, said 535 cases of fake invoices involving a total fraudulent claim of Rs 2,565 crore of input tax credit (ITC) have been booked and 40 persons have been arrested so far in the current financial year. In 2018-19, 1,620 cases of fake invoices were registered and as many as 154 persons were arrested.
With moderate tax rates and increased tax base, GST has the potential to promote economies of scale and enhance our competitiveness and boost growth, Thakur said. Former Finance Minister Arun Jaitley, in a blog on Monday, also highlighted the increase in tax base under GST, saying that the assessee base in the last two years has increased by 84 per cent.
“The number of assessees covered under GST today are at 1.20 crore. This obviously leads to higher revenue collections,” Jaitley said.
Jaitley also said the 12 and 18 per cent tax slabs in GST could be merged going forward as revenues increase, thereby effectively making it a two-tier tax. He added that as many as 20 states are already showing more than a 14 per cent increase in their revenues and do not require the centre to compensate them for revenue loss arising out of GST rollout.
Most items of consumer use have been brought in the 18 per cent, 12 per cent and even 5 per cent category, he said, adding that this rate rationalisation exercise has already resulted in annual revenue loss of over Rs 90,000 crore.
Outlining the future course of Goods and Services Tax (GST), Thakur said the government aspires to make it the best system in the world. “It’s a work in progress and the foundation has been laid and we are optimistic that we will deliver on our commitment. What we have put in place is already better than what we had pre-GST. There can be no better evidence for this than the fact that my party is back in the government even after implementing GST. I am told this is the first for any country or any party across the globe, so it’s a great achievement,” he said.
Thakur said the new I-T system, after having provided a “faceless, contactless” tax regime, will keep evolving to meet the future needs and challenges to ensure even easier compliance. “In the recent GST Council meeting, I could sense an urgency among all members to further improve processes and leverage automation to reduce compliance burden even further. I get the sense that GST is an indirect tax revolution that will surely propel India to become a global economic power, much sooner than predicted by some,” he said.
Thakur also said that the government will meet the Budget target for GST. “Even if there is any shortfall in a particular month’s collection, we will achieve the budget target at the end of the fiscal. I can assure you that in the coming months you will see an increase in GST collections,” Thakur said. Urging GST officers to be sensitive to the concerns of honest taxpayers, Thakur said their interaction with trade moulds public opinion about GST. “Therefore, I urge all GST authorities to remember at all times that as public servants they serve the trade by being sensitive to their concerns and resolving their genuine difficulties in accordance with the law. It is only through this partnership that we can achieve the goal of ‘one nation, one market, one tax’,” he said.