PreGST months’ tax receipts show more compliance: Jaitley
Undeclared goods are coming into the system
Finance minister Arun Jaitley Tuesday said the planned shift to the goods and service tax (GST) from July 1 has already led to higher tax compliance, pointing to the benefits the unified indirect tax will bring to the economy.
Briefing reporters on the ceremonial transition to GST planned in the Parliament House in the midnight of June 30, Jaitley said that revenue receipts from indirect taxes have shown a sharp increase in the months of April and May suggesting that goods that previously used to enter the value chain undeclared, are now being traded legitimately.
“Indications from the pre-GST months of April and May are that what were ‘undeclared goods’ have started coming into the system,” said the minister.
Data from the Controller General of Accounts (CGA) said that excise duty receipts in April 2017 stood at ₹1,323 crore, compared to an excise duty receipt deficit of ₹402 crore a year ago. Tax receipts become negative when refunds exceed collections.
Revenue secretary Hasmukh Adhia had on June 9 tweeted without giving absolute numbers that indirect tax receipts in April and May had gone up 36.7% in from a year ago.
Defending the decision of the GST Council not to defer the July roll-out of the tax reform, the minister said it was important to stick to the deadline.
“When you go in for reforms, the first principle is that you should never blink. If you do, you get derailed.”
GST is expected to increase tax compliance as it is nearly impossible for a business to clear goods out of a factory without paying taxes and keep it entirely out of the legitimate supply chain till the final consumer. In the services sector, works contracts is an area that is prone to evasion, said a tax official, who spoke on condition of anonymity. The indirect tax administration launched prosecution in 41 suspected tax evasion cases in first nine months of 2016-17, according to a finance ministry statement tabled in Parliament on February 3.
Jaitley said that with GST roll out, the economy will become more efficient while tax evasion will come down. He added that revenue receipts will grow and the spending capacity of both central and state governments will go up, which will in turn, accelerate GDP growth rate.
GST will be launched at a formal function at the Central Hall of Parliament where Members of Parliaments, chief ministers, state finance ministers, all former chairpersons of the empowered committee of state finance ministers and GST council officials will be present.
All state governments and union territories with legislative assemblies, except Kerala and Jammu & Kashmir, have passed state GST laws. Kerala is expected to pass the bill in a week while J&K is working on the legislative framework.