Lately, we hear a lot of criticism from all sections of the society, particularly the traders, who are clamouring about the tax burden, compliance difficulties, obstacles in doing business and so on. However, the Government has a different take on this (GST) , which does not support any of these claims.
As per the latest (July) statistics from the Government, you will be surprised to note that 40% of the assessees pay nil tax, while the remaining 60% did not have cash liability of over Rs. 33,000. Now, let’s get into details.
In the July month, almost 54 lakh businesses filed their returns out of which 40% have claimed ‘nil’ tax liability, without paying a single penny. That implies, around 22 lakh businesses did not even pay a single rupee of GST. Among the remaining 60% of the population or roughly around 32 lakh businesses, many did not have the cash liability and accordingly they have opted to avail the credits available for service tax or excise that they had paid, before GST was introduced on July 1. Within this figure, close to 70% had a tax liability between Rs. 0 – 33,000. However, a small figure comprising of just 10,000 companies or 3% accounted for a major GST share, i.e., 2/3rd of the GST that the Government has collected in the month of July.
Current status of the registered buyers
According to Finance Minister, Arun Jaitley, at present, close to one crore businesses and service providers have been registered, wherein 72 lakhs have migrated from the previous tax era, while 25 to 26 lakh new taxpayers have been added. He further added that over 94-95% of the collections were mopped from large assessees (with the turnover of over Rs. 1.5 crores), who make up roughly 10% of the overall registered taxpayers.
Then, why this criticism?
One of the senior officials has quoted that everyone is simply seeking exemptions, but most are not paying taxes. Political parties, on the other hand, are blaming the government for its poor implementation for the problems being faced by several quarters of taxpayers. However, the government on its part has its own version of why criticism has been mounted from various quarters. One reason is that earlier several entity were out of the tax purview or simply evading taxes, but are now coughed up to pay taxes. The government also admitted that as of now there were low tax collections, but in near future, the government is planning to widen the base and create space in the future, thereby reducing the tax rates.
Concept paper to help in tailoring the GST rates
In the recently concluded meeting on GST, Jaitley said that the GST council has decided on how rates would be determined in the future. He added that as revenue increases and based on the revenue neutrality situation in the future, rates will be tailored, as per the Concept paper, which has been approved.
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