What kind of tax buoyancy have you seen because of GST? Experts say GST collection figures do not mean much unless the government comes out with relevant comparative figures.
That comparative figure is given in Mr. (Arun) Jaitley's blog. We have compared the nine-month (2017/18) GST collection with the pre-GST period. The growth rate is 12 per cent annualised. We have compared that with taxes subsumed within GST. The tax buoyancy is not much. We need to keep watching.
How has GST data helped boost direct tax collections? We hear that advance personal income tax collections in the first quarter have gone up 44 per cent. How much of that is due to GST?
It is difficult to ascertain how much of this growth is due to GST. But it is a result of all anti-black money measures that the government has taken, including GST. GST is also supposed to improve direct tax compliance.
GST would throw up enormous data. Does the government have the analytical capacity and the manpower to use it meaningfully? How do you think GST data would help in fight against black money?
We have the capability. We have an entire company-GSTN-for that. So, whatever data analytics we want, they can produce it. But all this data analytics is to check tax evasion. We don't share this data with anyone.
Reverse charge mechanism, tax collected at source (TCS), etc, have been getting postponed for quite some time. Why don't you withdraw these provisions for good, giving some certainty to taxpayers?
There are two reasons why we are postponing (these measures). One, we want to be sure about what we are doing. For example, we can start TCS and TDS. But after deducting money of, say, a contractor in the government department, if there is no bridge between government accounting and GSTN accounting, money would not be credited to his account. Then there will be a problem. So, we have to ensure that a software that acts as bridge between government accounting and GSTN accounting is created. In case of TCS also, we have to ensure that whatever money is collected by the e-commerce operator and given to GSTN, the latter credits it to the account of the vendor. The second reason is that we want to initially give them a long rope. We don't want to create compliance burden too soon. So, we want to do it in stages. Let normalcy come first.
On reverse charge mechanism..
Reverse charge mechanism is being discussed by a group of ministers of the GST Council. It will come back to the GST Council with proper recommendations. That does not mean we are abandoning the idea.
Some exempted sectors like healthcare and education are suffering because they dont get the benefit of input tax credit. What is the problem in making them zero-rated?
Why should we make them zero-rated? Earlier also, there was no tax. If there is no tax on the final output, how can we give refund on input taxes? In our law, zero-rating is allowed only for exports.
Then they are saying that don't exempt us..
For the sake of hospital administration, should we burden the patients? That means they want to recover a part of their cost from patients. So, they want to say that their bill is `1 lakh but the government is taking 12 per cent from you and that amount they will adjust against their input tax credit. Why should we take a measure that is unpopular with consumers? That is what happened with restaurants. They had a lot of input tax credit, so we taxed them at 12 per cent and 18 per cent. Then what happened? Consumers were crying hoarse and restaurants were having a good time. They were not reducing prices despite getting input tax credit. So, we said, alright, we would make it flat 5 per cent without input tax credit.
You could have used the anti-profiteering measure to tackle restaurants not reducing prices..
We have got so many restaurants in the country. Is it possible to take anti-profiteering measure against lakhs of restaurants? It is not possible. It is impractical.
How many complaints have you received under anti-profiteering?
We have not received many complaints. We have received around 50 or so complaints out of which some are already closed, 30 are under investigation and six are with the anti-profiteering authority.
Do you expect a lot of litigation once the matching system starts?
The process would be smooth. It won't be too much of a problem. But that (matching) is the only way to prevent tax evasion. A lot of people are claiming false credit.
What are the three-four major changes that you see in GST in the next couple of years?
No major changes are expected. The only change could be a new return system. Then there would be small changes in the law to make life of taxpayers easier. For example, at present, for one invoice, you need separate credit and debit notes. Now, we will provide in the law that you can issue one debit/credit note against many invoices of the same party. So, the compliance burden will come down.
There are talks of the unorganised sector getting hit by GST. Does the government have any estimate of the damage?
There are anecdotal stories that we get to hear but they are not borne out of any research data. Our view is that GST has led to some amount of formalisation of the MSME sector and that has helped them. Now that they are in the GST net, they can prove that they have basic minimum revenue, which has improved their chances of getting credit from banks. The credit off-take from MSMEs has gone up.