Tax authorities to tighten the screw on traders to increase GST collections

In the wake of falling GST collection in October, tax authorities are set to tighten the screw on traders and retailers along with ensuring strict enforcement of tax laws by putting in place a localised strategy that will include heightened surveillance, search and raids, said a newspaper report.

According to the report, the authorities have come across ground reports of tax evasion, especially at B2C (business-to-consumer) level in the GST regime, affecting the tax collections. 

This was the reason that on Saturday, Revenue Secretary Hasmukh Adhia in an internal day-long meeting of the GST (Goods and Services Tax) field officers reportedly asked them to be tough in ensuring compliance to the new tax regime.

A senior official told the newspaper, "While in the last few months we have been busy helping the industry to switch to the GST and hand-holding them, some businesses, especially traders, have been evading tax. The maximum evasion happens at the final point of sale. We are now going to deal with this." 

The report said that tax officers generally meet in the month of November-December to review the tax collection and provisional revenue figures for the entire fiscal, but this meeting was, however, called on a very short notice as the GST collection saw a shortfall in October.

It may be noted that the GST collection in October fell nearly 10 per cent to Rs 83,346 crore from over Rs 92,000 crore in September. In the GST rollout month of July, the total collection was nearly Rs 95,000 crore while in August, the figure was over Rs 91,000 crore.

The report quoted the official as saying, "There have been reports of people doing transactions on kacha bill. Since the GST provides for input tax credit in the supply chain, the possibility of manufacturers or processors evading tax is less. The evasion is happening more at the time of final sale of goods and services." 

The official also hinted in the report that small taxpayers with annual turnover of upto Rs 1.5 crore and controlled by state tax authorities were suspected to be dodging tax payment.

According to the GST Council, states have powers to assess and administer 90 per cent of the tax payers under Rs 1.5 crore annual turnover while the remaining is controlled by the Centre. For tax payers with more than Rs 1.5 crore turnover, states and the Centre have divided them in 50:50 ratio.

The division of taxpayers in each state has been done by computer at the state level based on stratified random sampling taking into account the geographical location and type of taxpayers among others, added the report.