July was the first month after GST implementation and businesses were not well-versed with the new tax system and technical glitches. Still, the GST collection was 95,000 crore. It is quite an astonishing that instead of raising the GST tax collection for August Month, it has lower by 3.6% than July figure and the total tax collection by state and centre government stood at only INR 90,669 crore for August month.
Finance Ministry has cleared that the number 90,000 crore doesn’t include the taxes from more than a million small businesses who opted for a composition scheme (tax payment on a quarterly basis).
A report shows that only 3.7 million has filed the tax out of 6.8 million assesses. The compliance for August month till the due date is just 55% which is lower than 65% in July month.
This indicates that either tax base for August month may go up as many have not filed the tax returns yet and will file in future, or the taxpayers who have migrated from earlier tax system are not required to pay GST in the new tax system as threshold limit under GST is widen by GST Council.
Previously, the threshold limit was INR 10 lakh for normal business, INR 5 lakh for northeast states, and INR 5-10 lakh for businesses under VAT (Value Added Tax), and under GST the threshold limit is increased to INR 20 lakh for all taxpayers and 10 lakh for northeastern states. The taxpayers migrated from earlier to new tax system but they may not be eligible under GST to pay the tax due to less than 20 lakh turnover and it can be one of the reasons that registered taxpayers number is not matching with the taxpayers remitting GST.
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On the matter, Abhishek A Rastogi, a partner at law firm Khaitan & Co., said, “The government should go to the root cause and analyse whether these assessees are facing some genuine problems or they have been migrated automatically and are not required to comply.”
The August collection for CGST stands at INR 14,402 Crore, SGST at 21,067 Crore, and IGST at 47,377 Crore. Obviously, The aforementioned collection doesn’t include the 10.24 composition dealers.
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Tax partner at EY India, Abhishek Jain said that it will be too early to evaluate collected tax for August month because as many assess have not paid the tax yet. Furthermore, due to the inconsistency in transitional credit, exporters are unable to claim the refunds. So, GST Council is needed to be cautious about the fact that things would take time to settle down.
