On 19th November (Monday), Amit Mitra, the West Bengal Finance and Industry Minister wrote a letter to the Finance Minister, Nirmala Sitharaman. In the letter, Amit Mitra specified about the GST revenue collection dipping to a 19-month low in September by more than over Rs 2,500 crore. He mentioned that the GST revenue collection did not show any improvement because of the overall flaws within the system and substantial tax frauds.
He emphasised on the fact that in spite of constant warnings concerning the flaws within the system and GST frauds, no discussion was initiated regarding the same in the most recent GST Council meeting. The two-page letter also consisted of details about the problems that were created concerning fake input tax credit (ITC) claims. Dealers ended up paying input taxes due to false ITC claims made by the manufacturers.
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In September 2018 the GST collection stood at Rs 94,442 crore; in September 2019 the collection slipped to Rs 91,916 crore. There was a drop of Rs 2,526 crore when collections for September 2018 and September 2019 were compared. Amit Mishra contended that this was the first time the monthly revenue collections had hit an all-time low.
He further wrote in the letter that most of the state, as well as the Central GST authorities, were consistently identifying absentee registered tax-payers and false invoices. He quoted a few examples to support his statement regarding fake ITC claims. One of the examples being the investigations that were executed across 15 states in around 336 locations. Fake ITC claims worth Rs 740 crore were identified via these search operations.
He also mentioned that as ITC claims of fraudulent nature translate into a loss of tax, it’s crucial to identify leakages which contribute to pulling the GST revenue collection down. He stressed about how unhappy he was about not setting up a task force as per his suggestion to identify ITC-related frauds.
For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in
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”.
