After deciding to mandate the use of E-Way Bill to track the movement of goods within five states Andhra Pradesh, Gujarat, Kerala, Telangana and Uttar Pradesh from next week, the government is working to introduce other anti-evasion tools to shore up the collection of GST, where it suspects massive leakage is taking place.
On Tuesday, the finance ministry said that intra-state movement of goods in 5 Staes — which account for 61% of the inter-state e-way bill generation — will require the electronic tool from April 15 as part of the planned expansion. E-way bill had become mandatory for movement of goods valued over Rs 50,000 from one state to another at the start of the month.
Sources said in the coming days, the states are planning to step up checking of e-way bills as they suspect that they are losing a large amount of revenue.
On April 16, a committee headed by Bihar deputy CM Sushil Modi will deliberate on ways to reintroduce the reverse charge mechanism, a key anti-evasion tool that was suspended in the wake of protest from traders.
Reverse charge is to be paid by registered GST payers on behalf of small suppliers, who are exempted. The registered dealer or the buyer, who has to pay GST under reverse charge, has to undertake self-invoicing for purchases. While it keeps small businesses out of the tax ambit, SMEs complain that the cost is borne by them and this makes their businesses unviable, although officers believe that the motive behind resistance to blocking reverse charge mechanism is to evade taxes. The government will pay credit to traders against the reverse charge.
“Even under VAT, many states had the tool. But given the concerns we will look at options to ensure that businesses are not impacted and remain viable,” said a finance ministry official. One option is to increase the threshold of daily transactions to keep several small businesses out.