GST gives govt a reason...

The improvement is an indication of a widening tax base and that the initial glitches in implementing the indirect tax regime are behind the government.

Additional steps to boost revenue collection may lead the shortfall to narrow further.

“The inherent characteristic of GST is that it would result in tax buoyancy. This buoyancy would not only come from widening of the tax base but also from imported compliance and competitiveness of trade and industry. So, therefore, it would be but natural to expect the requirement of compensation to States for loss of revenue going down from year to year,” Shaktikanta Das, the former Union economic affairs and revenue secretary and member of the 15 Finance Commission, said. Among other things, the introduction of electronic waybills (e-way-bills) — an electronic documentation detailing the movement of goods above a certain amount — has led to increased transparency and better collections.

Documents prepared by the GST Council, which is overseeing the implementation of the indirect tax regime, reveal that the number of entities filing tax returns has slowly grown.

In December 2017, about 66% of the entities enrolled under the regime filed their returns. Subsequently, the numbers dipped. For July, 2018, however, 68% of entities had filed their tax returns.

“The compensation amount has reduced due to better implementation, widening of tax base and better implementation. It has resulted in better revenue collection. It is expected that state governments will take more steps to boost their revenue collection further which would further reduce the amount compensation from the centre in the near future,” additional director general (media and communication), DS Malik, said.