Compliance under GST, the One Nation One Tax, has been on an upward trend. This is cemented by the fact that composition-scheme dealers reporting average annual revenue of Rs 20 lakh increased by two times in the last quarter of FY 2017-18. The increase in taxpayer numbers in this relatively small list indicates great times ahead. Reportedly, composition schemes can be availed by any individual or business person whose annual sale figure is in the range of 20 Lakh to 1.5 Crore. These are good signs for formal sector. These initial ripples must change into waves someday.
Advantages of Composition Scheme
- Easier compliance requirements
- Quarterly Return Filing
- Pay only a fraction of your sales as part of GST proceeds to the Tax Authority
*Since January 2018. The Flat 1% GST rate on all categories (manufacturers, traders, and restaurants) under the Composition Scheme
Proceeds of Composition Scheme
For January-March Quarter: 12 lakh Composition-Scheme Taxpayers paid a total of Rs 579 crore.
The average proceeds from each of the 12 lakh Composition-Scheme Taxpayers stand approximately around Rs. 20 Lakh. This is more than 100% increase in proceeds of July-September and October-December quarters that reportedly stood at Rs 8 lakh and Rs 9 lakh. Only 6 in 10 taxpayers under the composition scheme actually filed returns for the last quarter of the last fiscal year.
An Upbeat Tax Department
The twofold increase in compliance has further asserted the foolproof fabric of the GST. As per a Tax Department official, it’s futile to evade taxes under GST as the system can easily report any mismatch between purchases and sales. There is no escape and taxpayers now realize that it’s counter-productive to evade taxes in GST system as mismatches would show up eventually. Tax Department has further sent hundreds of notices for any reported mismatches that came before the department.
Recovery post The Early Setbacks
During the teething months of GST, the government was expecting large-scale tax evasions facilitated mainly by large-scale under-reporting of sales. The proceeds for the first quarter were disheartening. However, GSTN which is the backbone of GST was still not up and running, bogged down primarily due to technical glitches. However, with time this has been resolved. Anti-evasion tools like the e-way bill as well as a comprehensive return-filing system are now part and parcel of GST. They account for a robust and hassle-free GST with strong plugs on erstwhile revenue leakages.
The Revenue Department is quick to point out that the increased proceeds can mainly be attributed to following reasons:
- Fear of Harsh Penalties
- Lowering of tax rates with effect from January 2018.
- Frequent awareness and outreach programmes by the Government.
What do the Experts say?
The experts believe that the main reason for such a steep growth in composition tax revenue is primarily driven by Augmented Revenue. Also, another major reason is a frictionless GSTN has spurred tax compliance. Further experts firmly believe that the compliance will only get bigger with the introduction of the e-way bill (electronic waybill for Interstate and Intrastate movement of Goods). The fact that a stable GST Portal now easily supports processes, rates etc would further necessitate as well as encourage compliance.
