New Delhi: Goods and services tax (GST) collections touched a record Rs1.03 trillion in April, the first time it has crossed the Rs1 trillion-mark in any month since the new tax regime debuted on 1 July.

The buoyancy in tax collections could be attributed to economic recovery and improvement in compliances, the finance ministry said in a statement, but cautioned that the higher numbers could be partly due to the payment of tax arrears.

To be sure, GST revenue buoyancy is expected to improve in the coming months with implementation of the e-way bill or electronic tracking of goods movement from 1 April. This is expected to become a deterrent for tax evaders looking to keep transactions completely off their books or to under-report their turnover.

Further, other anti-evasion measures like invoice matching with new improved tax return forms (likely to be finalized in the next GST Council meeting on 4 May), introduction of reverse charge mechanism and the requirement for some taxpayers to withhold tax while making payments are expected to further shore up the anti-evasion architecture. Reverse charge is a mechanism through which large registered dealers have to pay tax for purchases from small unregistered dealers.

Finance minister Arun Jaitley said the GST collections reaffirm the increase in economic activity. “With the improved economic climate, introduction of e-way bill and improved GST compliance, GST collections would continue to show a positive trend," he wrote on microblogging site Twitter.

Of the total revenue of Rs1.03 trillion collected in April, Rs18,652 crore was central GST, Rs25,704 crore was state GST and Rs50,548 crore was integrated GST (including Rs21,246 crore collected on imports), the finance ministry statement said. The cess was Rs8,554 crore.

To be sure, compliance remains a challenge with only around two-third of the tax payers filing tax returns on time. The total number of GSTR 3B Returns filed for March up to 30 April 2018 was 6.047 million as against 8.712 million taxpayers who are eligible to file, putting the compliance rate at 69.5%. Around 1.147 million composition dealers of a total of 1.931 million such dealers filed their quarterly return in April and paid a tax of Rs579 crore.

“This represents a tipping point in the GST collections in India and indicates that the tax collections are stabilising- it is now essential to allow the reform to stabilise and not keep making constant changes as simplification and stability are essential attributes of increased tax compliance," said M.S Mani, partner, Deloitte India.

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