Covid won't deter us from path of speedy GST reforms: Ajay Bhushan Pandey

Work on revenue augmentation and rate rationalisation is being carried out by a panel of officers, Finance Secretary Ajay Bhushan Pandey tells Dilasha Seth on the occasion of the GST entering its fourth year of existence. While not affirming new timelines for the simplified returns forms, Pandey says invoice matching is already happening at the back-end and quarterly payments are allowed for small taxpayers. Edited excerpts:

What explains the high June GST collections at Rs 90,000 crore, when there was lockdown in May?

These figures are largely reflective of domestic transactions done in May, but import transactions are for June. Some domestic transactions of March and April are also reflected here due to the extension in returns filing timelines. Import transactions are registered in the same month. What the numbers show is that the economic activity started resuming in May even though there was some degree of lockdown. In June we are unlocking, so the situation will further improve.

What is the GST collection target for the current fiscal year now?

We gave a budget estimate for GST revenue in the Finance Act. The time it was passed, the whole country was hit with the Covid situation. We will have to assess as to what extent the problem would continue and to what extent the economic activity will pick up. It will all depend on that. At it happens every year, estimates are considered for revision at the time of presenting revised estimates to Parliament.

With the pandemic throwing economic activity out of gear, will the much expected GST reforms, such as returns simplification or e-invoicing, get derailed? A few state FMs have raised this concern.

I don’t think that we will deviate from the reforms path. During the last three years, more than 460 million returns have been filed and Rs 25 trillion collected as taxes through the GST system. About 10 million returns are filed every month. We are focused on making life easier for taxpayers. I don’t think the Covid-19 pandemic situation will deter us from this path.

What are the key reforms that are needed?

We have tried to simplify the system during the last three years. But we have to go for more simplification so that people are more at ease in filing returns and paying taxes. We have also simplified the timelines for taxpayers and soon Aadhaar will be used for registration, eliminating the need for physical inspection before a new GST registration. It will be implemented in a secure manner without violating the privacy of the tax payer. With this, one will get  GST registration within a few minutes. Last month, finance minister (Nirmala Sitharaman) launched issuance of PAN card through the Aadhaar number. A similar reform is planned for GST also.

But what is the new timeline for launching the simplified returns this year that will help small taxpayers and also the invoice matching to plug evasion?

We will have quarterly returns for small taxpayers. It is incorrect to say that invoice matching is not taking place. It is being done internally in the backend and red flags are getting generated based on mismatch. The process is in place since January 2019. Taxpayers are contacted in a non-intrusive manner through emails and SMSes and made aware of the invoice mismatches so that they can take corrective actions and pay the due taxes. 

With most estimates putting India’s gross GDP growth in negative, what does it imply for tax collections this year?

Despite lower economic activity for several months in 2019-20, our tax collections were ahead of the economic growth rate. But this year, we will have to wait and watch the impact of Covid-19.

The council has been discussing about rationalisation of GST rates, clubbing multiple slabs and correction of the inverted duty structure. But not much progress has happened. Do you think re-looking at tax rates will be difficult this year?

A group of officers and a group of ministers were constituted to look into revenue augmentation. They are working on how to augment revenue and rationalise rates. The GST Council is engaging at all levels to correct  the inverted duty structure. In case of mobile phones, inverted duty correction was made in the GST Council’s March meeting.

Adverse and conflicting Authority for Advance Rulings (AARs) have been a major criticism of the GST regime. When will the central appellate AAR (AAAR) body be set up?

It will not be fair for me to comment on the judgments of judicial forums. As for AAR’s central appellate authority, the GST Council has taken a decision and steps will be taken to operationalise it.