Government makes an upward revision to the GST revenue targets

The Ministry of Finance has raised the bar for the GST collections for January, February and March 2020. The government has set the new targets to Rs.1.15 lakh crore and Rs.1.25 lakh crore for January to March 2020 respectively.

The decision was drawn at a recent meeting held between the Central Board of Indirect Taxes and Customs (CBIC) and Central Board of Direct Taxes (CBDT). A government official told The Economic Times that all the field formations had been advised to exert extraordinary efforts for initiating actions against any wilful GST evaders. Additionally, measures will be devised to counter the usage of fake invoices or inflated or false e-way bills.

The anticipation of a higher GST collection would bring some relief on the fiscal deficit front for the office of Union FM Nirmala Sitharaman. The fiscal deficit has already exceeded the Budget estimate of more than Rs 107 lakh crore. The tax and disinvestment revenue are lower than expected.

Accordingly, the deficit is expected to widen further and could be revised by at least 20 basis points (100 basis points is one percentage point) for the current fiscal year to 3.5% of GDP.

The Revenue Secretary has also emphasised that the department will use GSTN’s data analytics to source crucial information about the taxpayers. It includes the mismatch of supply and purchase invoices, mismatch in return filings, over-invoicing, excess refunds availed, patching the tax leakages, fake or huge ITC claims, and refunds under inverted duty structure. Thereafter, personalised email or text messages will reach the tax defaulters after which GST field formations will attend to ensure timely payments of tax liability.

With the revision in tax targets, the government seems to be taking an aggressive path despite the pending implementation issues. It can be noticed through several measures that can see a direct impact on the taxpayers’ compliance.

One of them is the restriction of the provisional tax credit claims in GSTR-3B to only 10%. It steadily increases the cash payment of GST with the tax department, unlike the past months where unsupported tax credits claims were taking over. 

Furthermore, the tax officers have been asked to follow a standard operating procedure for sternly following up with the non-filers of GST returns. All taxpayers will get notifications before the filing deadlines as a nudge.

Also Read: Issuing E-Invoices Under GST – May Not Be Mandatory for Banks and Telcos

Post that, they will get caution messages for non-filing the returns. In case of failure to file within the specified time limit, they will get a notice. In case of a non-reply or default in filing returns, the tax officers shall close it by doing the best judgement assessment for the tax period, based on facts on hand. 

Additionally, the upcoming new GST return system, as well as the e-invoicing system, are advocated to shift to a better automated and transparent tax system that was initially dictated by GST.

The government observed that the GSTR-1 filings were low for all periods when compared to GSTR-3B. This observation led to incomplete reconciliations posing difficulty for the department to identify mismatches of tax credits with the GSTR-3Bs.

Hence, the government provided relaxation to such taxpayers through a late fee waiver scheme. The deadline to file all the past GSTR-1s was extended to 17 January 2020. The filing of GSTR-1s will now provide an opportunity for the department to capture recipient taxpayers who have faultily claimed tax credits in FY 2017-18 and FY 2018-19.

The taxpayers will have to gear up yet for another shocker as the department will soon be sending out notices for tax defaults with another data source including departmental or special audits. GSTR-9 for FY 2017-18 and FY 2018-19 is due on 31 January and 31 March 2020 respectively.

Once filed, the government will rigorously undertake annual reconciliations to identify cases of mismatches in tax credits available versus claimed and tax liability versus paid. The taxpayers should be vigilant of what is being filed and to not leave any tax payment due, since the annual return once submitted cannot be revised.

Hence, all these measures, when implemented together, should factor a push in the GST revenue collections for the upcoming months.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in