New Delhi: Officials of the central and state governments on Friday began exploring ways to step up revenue collection from the goods and services tax (GST) which has consistently remained below target.
Officials discussed ways of improving the tax system’s efficiency and compliance by taxpayers, said an official who attended the meeting. The development signals the urgency felt by the central government to improve revenue collections, considering that it has given a constitutional guarantee to make up for states’ loss even if its own exchequer is not healthy. The reduction in corporate tax rate for businesses announced last month is also likely to put pressure on the central government’s fiscal position this year.
Federal tax body the GST Council on Thursday set up a 12-member panel of central and state officials to find ways to prevent evasion, widen the tax base and improve voluntary compliance. This panel, however, will not propose tax rate increases.
“It will only examine everything other than tax rate increase for augmenting revenue," the official cited earlier said, seeking anonymity.
During the day, finance minister Nirmala Sitharaman met businessmen and chartered accountants in Pune, news agency ANI reported. “We just can’t damn GST now. It has been passed in Parliament and in all state assemblies. It might have flaws, it might probably give you difficulties but I’m sorry, it’s the ‘kanoon’ of the country now," ANI reported quoting the minister.
The GST Council has already resisted pressure from industries like automobiles for rate cuts and also raised the rate on caffeinated drinks when it met last month. It has taken a series of steps to step up revenue collection using the full potential of technology.
On Friday, it released standards for e-invoices which will help in easy machine reading of invoice data shared by businesses, banks and the tax authorities.
It will be voluntary for business to business transactions from January.
“The concept note clarifies various ambiguities on e-invoicing. Aspects like it being voluntary to start with, its goal of standardizing the formats and generation of e-invoices through all existing ERPs (enterprise resource planning) of business, provide clarity to this new change under the goods and services tax," said Abhishek Jain, tax partner, EY.