The 37th GST Council meeting is scheduled to happen in Goa on 20 September. The government’s initiatives to increase GST revenue collection is probably going to be a major discussion topic in this meeting.
The Centre plans to make processes revolving around ITC claims more stringent. GST rate cuts with regards to the auto sector and other stressed industries are expected to be discussed in the upcoming Council meeting. The Centre aims at getting the states to agree on initiatives to put an end to tax evasion, leaks, and misuse of GST-related provisions.
Mostly, businesses make 20% of their tax payments via cash and rest of tax payment via the tax credit they have accrued in their accounts. Based on the same principle, the finance ministry is working out on a plan along with the states wherein in order to increase the limit to claim ITC, 20% of the payment needs to be done as the “margin money”.
As in, suppose a company’s turnover is around Rs 60 lakh, and the organisation wants to increase the limit to Rs 70 lakh, the company will need to pay “margin money” of Rs 2 lakh.
A government official mentioned that the complete process is going to be automated to prevent any discretion. Upon receiving orders, a business will have to convince officials for a higher limit or speak with the bank officials and get an additional 20%.
As a first initiative, the government has made Aadhaar verification mandatory for new dealers. Also, another focus area would be to restrict the ITC amount a company can claim, particularly when it is new.
Hence, the ITC, a company can claim during the first or the second financial year might be linked to its annual turnover. Also, any enhancement in the limit to claim ITC might have to be passed by a committee of officers. Identifying gaps and looking at ways to increase GST revenue collection will be the key focus areas in the upcoming GST Council meeting on Friday.
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Bhavana is a Senior Content Writer handling the GST vertical. She is committed, professional, and has a flair for writing. When away from work, she enjoys watching movies and playing with her son. One thing she can’t resist is SHOPPING! Her favourite quote is: “Luck is what happens when preparation meets opportunity”.