Taking cognizance of falling goods and services tax (GST) collections, the GST secretariat on Thursday constituted a special committee of officers to suggest measures to augment GST revenue collection and to address the administration challenges. The council has given a 15 day time period to the committee to submit its first report.
The office memorandum issued by GST Secretariat states, “It has been decided that a committee will be constituted to suggest measures to augment GST revenue the committee of the following officers from the centre and the states is required to suggest steps to be taken to improve revenue collections.”
State-level officers include commissioners from Maharashtra, Tamil Nadu, Uttar Pradesh, West Bengal and Punjab. Central level officers include principal commissioner joint secretaries and ADG level officers.
The council has also asked other states wanting to join the committee can do so on a volunteer basis by writing to the GST Council or by sending in their suggestions.
Meanwhile, sources say, “The move comes after GST council chairperson and finance minister Nirmala Sitharaman took a detailed review after noting poor collections and she had then asked revenue dept to take urgent measures to arrest falling collections, based on which it was decided to create such a committee of officers.”
Sources also shared that “Revenue Secretary Ajay Bhushan Pandey will himself oversee the measures to be suggested by the committee, two main areas will be revenue augmentation and curbing of tax avoidance/evasion.”
It is important to note here that earlier the then revenue secretary Hasmukh Adhia had himself chaired revenue augmentation drive when he had opted a state-wise revenue analysis approach but only for a select few states. Now the newly constituted committee will take a pan-India approach.
GST collections had fallen to a 19-month low of Rs 91,916 crore for the month of August recorded in September raising fresh concerns.
A decline in collections was flagged off by a lot of state finance ministers as a serious cause of attention.
Noting the poor collections, Kerala Finance Minister Thomas Isaac on 2nd October had tweeted "Record low GST collection is not only a reflection of the economic slowdown but also the mess in GST administration. What compliance can you expect when even the first annual return is yet to be filed? And also rates have been continuously slashed to less than revenue-neutral levels."
“The committee should consider a wide range of reforms so that a comprehensive list of suggestions may emerge. The committee may consider looking into areas such as systemic changes in GST including checks and balances to prevent misuse and measures to improve voluntary compliance, policy measures and relevant changes needed in the law and measures for expansion of tax base, measures for improved compliance monitoring and anti-evasion measures based on Data analytics and better administrative coordination,” the office memorandum says.
“The committee shall submit its first report within 15 days to the GST Council secretariat which will coordinate the meetings of the committee to ensure finalisation of the inception report within the above-mentioned time limit and facilitate deliberations on the above-mentioned areas.” The memorandum added.
On the other hand, considering this is a much-awaited step, experts say that the committee might want to take more time to analyze the trends in detail which would yield better results.
“In view of the recent dip in GST collection, it seems that the Government wants to expedite its efforts to augment the revenues. With limited room for an increase in tax rates, the committee may focus on areas to check the tax leakages and explore anti-evasion measures including tightening of tax administration. However, given the complexities of issues involved, 15 days seems too short a time for the committee to come up with their initial report,” said Pratik Jain, national leader, indirect taxes, at PwC.
Similarly, MS Mani, Partner, Deloitte India says, “ it was expected that revenue augmentation would become a key focus area on account of the below-plan GST revenues in recent months. Businesses would hope that it does not result in any coercive steps and a balanced approach to target tax evaders without impacting tax-compliant firms is adopted.”Abhishek Jain, Tax Partner, EY too added, "A detailed evaluation of exploring possible avenues for increasing GST revenue is a much-needed one currently. With GST revenues witnessing a less than expected growth, analysis and review with experience from different states should help revenue growth"