Poor collection mars GST flat rate scheme
The composition scheme has yielded just Rs 215 crore in the first quarter since the goods and services tax (GST) was introduced.The number has accentuated the worries of falling GST tax collections that declined to the lowest in November, prompting tax officials to pin their hopes in the upcoming electronic way (eway) bill that will track movement of goods.
The composition scheme allows small enterprises to file a flat tax rate without input tax credit once inaquarter. Of the 1.1 million assessees in the scheme between July and September, only 600,000 submitted returns, sources said.This roughly translates into less than Rs 2 lakh turnover in the quarter for each assessee under the composition scheme or Rs 8 lakh inayear, if average tax rate of two per cent is assumed.
This has perplexed tax officials because assessees with annual turnover of up to Rs 20 lakh are not required to secure the GST registration.Between July and September, assessees with an annual turnover of up to Rs 75 lakh were allowed to opt for the composition scheme.
The limit was raised to Rs 1 crore in October and Rs 1.5 crore in November.A five per cent tax is levied on restaurant owners, two per cent on traders and one percent on manufacturers under the composition scheme.
There are 1.5 million assessees in the composition scheme now.Sources in the GST Council said the upcoming eway bill would plug these kinds of loopholes.They expect that the mechanism would lead to a 1520 per cent increase in the GST revenues, which had fallen short of their Rs 91,000 crore monthly target in October and November.
Eway bills will be introduced for interstate movement of goods from February 1 and for intrastate movement of goods by July 1. By the time the eway bill is introduced, the Budget for 2018-19 will be tabled and any increase in the GST revenue on account of this is likely only in 2018-19.The sources pointed out 17 states had introduced eway bills for value added tax (VAT) and had witnessed a 25 percent rise in revenue after the move.
According to sources,apilot project on the GST eway bill in Karnataka generates 110,000 bills every day.Eway bill generated on the phone would be linked to supply returns and if a few more details were provided there would be no need to separately file the GSTR1, sources said. Assessees with annual turnover of up to Rs 1.5 crore would need to file two digit Harmonised System of Nomenclature (HSN) codes, and not 10 digit HSN codes, for the goods carried, the sources added.
These bills can be generated by the seller, buyer or transporter.If a vehicle is inspected for more than half an hour, the transporter can complain to the authorities.Aggregate way bills can be generated if a transporter carries goods from multiple sources.
Finance Secretary Hasmukh Adhia has asked traders and transporters to generate way bills.“Let us all prepare for the February 1 deadline for eway bill for interstate transportation of goods,” he said in a tweet.Along with the eway bill, the reverse charge mechanism is expected plug leaks in the GST.
GST collections fell to their lowest at a little over Rs 80,000 crore in November.There is also a pre-GST stock claim of Rs 130,000 crore.
TAKING STOCK OF THE NUMBERS
1 million assessees between September, only submitted roughly translates less than Rs 2 lakh in the quarter assessee are 1.5 million in the scheme
Deadline for supply returns extended to Jan 10
The government on Friday extended the last date for filing of final detailed sales return for the first four months by 10 days under the goods and services tax (GST). The extension of the deadline to January 10 comes as a relief to taxpayers struggling with technical issues related to the GST Network portal
According to a government notification, businesses with turnover of more than Rs 1.5 crore has to file GSTR1 for JulyOctober by January 10. For small taxpayers with annual turnover up to Rs 1.5 crore, too, the date for filing these returns for the first three months has been extended to January 10. “Extension comes as a relief for the industry as functionality for filing GSTR1 for August to October came in second half of the current month only,” said Pratik Jain of PwC India.
There were also system related issues in a few cases with respect to data upload, saving and generation of onetime password.“It also means that tax and finance professionals will not have to spend their New Year eve in office.” Atul Gupta, senior director, Deloitte India, said the GSTN portal had become exceedingly slow and a large number of taxpayers were struggling to upload returns over the past two days.
“Evidently, the government has to work and make the GSTN portal glitch free and robust to handle the load. Undoubtedly, the time is running out for the government to fix the GST,” he said. Gupta added that a significant reason for lack of buoyancy in GST revenues was that tax noncompliance was on the rise in the absence of any significant self regulating deterrence mechanism, GSTR 2 returns for purchases were still not required to be filed.
The Business Standard, New Delhi, 30th December 2017