Home >News >India >GST Council sees little revenue impact in further easing tax compliance

NEW DELHI : The federal indirect tax body, Goods and Services Tax Council (GST Council), has found that there would be little revenue impact in further substantial relaxation in the compliance burden on small taxpayers under a scheme that is being discussed.

The plan is to let businesses with up to 5 crore sales to pay taxes on a quarterly basis. They already have the option to file taxes on a monthly basis on self-assessment and file returns on a quarterly basis. But this facility has not found much favour among the industry, and many are opting out of it.

Finance minister Nirmala Sitharaman has said that the proposal to allow quarterly tax payments by small businesses was discussed at the GST Council meeting last Friday, and referred to a panel of officials to work out modalities.

This facility when offered will offer substantial relief to more than 70% of the 12.8 million registered GST payers, without any significant impact on revenue receipts, said a person privy to the discussions of the council.

Only two-fifth of the eligible 9 million GST payers by sales have opted for the current scheme of monthly tax payment and quarterly return filing, the person said on the condition of anonymity. They roughly account for only 4% of the quarterly GST receipts. One factor that will aid in deciding on further compliance relaxation is the thumb rule in taxation that bulk of the taxpayers contribute only a small share of the overall revenue collections, while the remaining few account for the lion’s share. Quarterly tax payment facility would lead to only deferring tax dues of the first and second months of a quarter to the third month.

Many small businesses grappling with business disruption and liquidity problems during the current wave of the pandemic have been seeking relaxation in compliance requirements. They have also made the point that while offices remain shut, consultants they engage are not in a position to finalize the tax obligations and help make payments.

The council last week offered a series of relief measures, including an amnesty scheme for past defaults in GST return filings and capped the maximum late fee that can be levied in case of delays in returns filing in the coming months. Businesses have also been offered relief on interest payment for delayed tax payments for March, April and May.

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