As GST non-compliance rate rises 3-fold, govt set to strike at defaulters

GST compliance has steadily declined over the past one year as 28.75 per cent of regular taxpayers did not file returns in November 2018 compared to 10.56 per cent in the November 2017, which is an almost three-fold increase in non-filers, a written reply by MoS Finance Shiv Pratap Shukla in Lok Sabha shows.

Among composition taxpayers, the non-filers has increased to 25.37 per cent in the July-Sept period of 2018-2019 from 15.03 per cent in the July-Sept of 2017-2018.

GST compliance. Table: Lok Sabha

The composition scheme allows businesses to pay taxes at a concessional rate and makes compliance easy under the Goods and Services Tax (GST) regime which was rolled out on 1 July 2017. Businesses with an annual turnover of up to Rs 1 crore can opt for the scheme.

Asked whether the authorities are considering putting in place an extensive plan to hunt for these missing GST taxpayers, the minister stated, "Details of the non-filers of returns are regularly shared with the jurisdictional tax authorities and measures including inspection, visit of premises, search and seizure are being undertaken wherever required".

Fake invoices to claim input tax credit increased from only 4 cases involving Rs 9.75 crore in 2017-18 to 499 involving Rs 3894.94 crore in 2018-19, the reply said.

Input credit means at the time of paying tax on output, a business can deduct from it the tax already paid on inputs. 

Fiscal repercussions

With a shortfall in seven of the nine months so far in 2018-19, GST collection in January, February and March has to be on average Rs 1.23 trillion to meet the budgeted target, as reported earlier by Business Standard. Admitting that the fiscal year would end with some shortfall, finance ministry officials have said the amount would be near Rs 40,000 crore.

Tax evasion detected in April-November stands at Rs 12,767 crore, of which Rs 7,910 crore has been recovered, according to the data presented by the finance ministry in Parliament, as reported earlier by Business Standard.

The minister told Parliament that late fees for filing GST returns have been waived in the last GST Council meeting to increase tax compliance.