Inspired by the continuous increase in tax compliance ever since the launch of the goods and services tax regime, the GST Council has set the target for GST revenue for the ongoing financial year (FY19) at Rs 12 trillion. The target doesn’t seem unreachable given the fact that the revenue collection from GST in the first financial year (FY18) was more than Rs 7 trillion (Rs 7.41 trillion to be exact)
The monthly target for GST revenue, which was Rs 91,000 crore in FY18, has been set to Rs 1 trillion in FY19, with a yearly target of Rs 12 trillion.
The federal body responsible for managing the indirect tax system had earlier reported that the average monthly revenue received in the last financial year was Rs 89,885 crore, just a little shy to the Rs 91,000 target. “GST receipts in FY18 have not been bad. The revised monthly revenue target for FY19 takes into account a 14% increase in states’ revenue growth estimate for compensation,” explained a finance ministry official.
The signs of economic recovery and the success of anti-tax evasion measures have been major factors in boosting the confidence of policymakers in the GST’s potential of generating higher revenue. The government is also hoping to receive a positive response from the recently implemented e-way bill system, which is an electronic system to track the movement of goods.
Growth of Economy
The economy of the country, which dropped initially after the implementation of the goods and services tax regime, is now showing the signs of a recovery. The growth rate has spurred from 5.7% in the first quarter of FY18 to 6.5% in quarter two and 7.2% in the following quarter. The overall economic growth in FY18 stands at 6.6%, which is quite awesome after the initial decline in the post-GST era.
The Council expects to generate a revenue close to Rs 96,000 crore in April 2018, which is further expected to reach the monthly target of Rs 1 trillion in June-July of the current financial year.
Anti-Tax Evasion
The steps taken to stop tax evasion have also played a major role in the growth of the revenue collection. This includes implementation of e-way bill system, sales-supply verification (matching) from multiple sources and the proposed simplification of the GST return filing system. As reported by an official, another plus point is that the GST system is improving which is contributing to more revenue collections.
“GST receipts in April (for sales in March) are expected to be around Rs95,000-96,000 crore,” said a GST official.
The changes implemented by the Council in the various GST rules also reportedly had a positive impact on the revenue growth. For example, the authorities are now working to automatically link e-way bills of particular businesses with their sales returns (GSTR 1) to detect and stop tax evasion.
The seamless flow of data of direct and indirect tax returns between authorities is also helping detect tax evasion. Even small businesses, including those who opt for presumptive taxation scheme, are now required to quote their GSTIN along with details of annual turnover in their tax return forms for the year 2018-19.
