The goods and services tax (GST) has stabilized since its introduction on 1 July and in the coming days, steps will be taken to check tax evasion and further simplify the tax, said Sushil Modi, deputy chief minister and finance minister of Bihar. In an interview on the eve of 200 days since the implementation of this tax reform that aims to unify the country into a single market, Modi, who also heads a panel that looks into issues facing the GST Network, said the implementation of the e-way bill system along with commencement of invoice matching will help reduce tax evasion. He also said this will not lead to harassment by tax authorities: Edited excerpts:
How will you assess the implementation of GST at 200 days?
GST has stabilized. As compared to earlier, there are very few complaints now. GST is a big reform and therefore its implementation was bound to bring its fair share of challenges.
In GST, every step is computerized. Under value-added tax, there was only 40% computerization of processes and the remaining 60% of the processes was done manually. All states were at different stages of computerization. Since everything was online under GST, small dealers faced difficulties initially.
What are the implementation challenges that the Council is facing?
We need to increase the comfort of small dealers. In the coming days, the e-way bill will be implemented. We had deferred the implementation of the e-way bill.
Invoice matching was also deferred and taxpayers did not have to fill GST Return 2 and GSTR 3 forms. The returns filing process is also lagging.
The meeting of the GST council on 18 January will look into the issue of how to simplify invoice matching.
In tax rates, 80% of the issue has been resolved. If there has to be further rationalization, we will take it up in March after the states’ budget.
There is also a compliance issue with regards to the compounding scheme wherein only Rs251 crore has been paid in tax by more than 600,000 assesses.
The issues around the GST Network have also been resolved to a great extent. The process has been simplified and there are no major issues that remain.
Once returns filing stabilizes, then data mining will start to look for tax evasion patterns. Tax returns will be analyzed and the trends and insights will be shared with the states.
How will tax evasion be addressed?
There are no barriers at present. E-way bill has not been implemented. Reverse charge mechanism is also not in place.
Input tax credit is being claimed and there is no way it can be verified since the deadline of GSTR 2 and GSTR 3 forms has been extended. Once all this is in place, tax evasion will come down. Tax buoyancy will increase and tax revenues will stabilize.
Industry is worried about harassment due to the e-way bill implementation. What steps is the council considering to alleviate their fears?
There are no check posts in GST now and some documentation is necessary. If you are carrying a proper e-way bill, you will not face any issue. You can carry the e-way bill on the mobile phone. The goods cannot be stopped for more than 30 minutes. There will be no harassment. Karnataka has successfully rolled it out, issuing more than one lakh of e-way bills. Some other states have also started. From 1 February, all other states will also roll it out.
When will we see real estate and petroleum products being brought under GST?
That will take some more time. At present, the focus is to make the tax simpler and ease the burden of compliance.
Given some of the recent statements made by a finance minister outside the Council, do you think there is a threat to the political consensus under GST?
Irrespective of the statements made by ministers outside the Council, there is no politics inside the Council. All decisions have been so far taken by a consensus. The stand of any state is taken, keeping in mind the interests of the state and not political affiliations.
Will the Council consider making changes to the composition scheme?
There are only small dealers under the composition scheme and not much revenue comes from them. But there is evasion and we will look into it. At present, 90% of the revenue comes from 10% of the dealers. They will be the focus.