We have introduced changes at the systemic level. All these measures will lead to better compliance and that, together with increased economic activity, will lead to better revenues, says the Secretary of Finance. Ajay Bhushan Pandey.
GST collections have been the highest since its inception. To what do you attribute this and convey a larger picture of the sustainable recovery in the Indian economy?
In December, the collection was over Rs 1,15,000 crore. Broadcast the transactions or business that took place in November. November was immediately after Diwali and there was a resurgence of the crown in various parts of the country that resulted in movement restrictions and then closures in certain parts of the country and then businesses were affected. However, there was a trend of business recovery or economic recovery and that was one of the important factors in the higher collection in December.
But other than that, two more things have happened: Over the past few months, we have been working to bring a lot of systemic changes within the GST for which work was already being done in the last year and a half. For example, in September, we brought in Aadhaar-based GST registration because the purpose was that, on the one hand, you would simplify the life of the honest taxpayer and at the same time check the fraudulent items that they used to obtain records and then use to allow themselves the fraud.
Also, previously the input tax credit was based on self-assessment and there too, those who had an honest intention would take only the eligible input tax credit, while there were certain items that they thought they might take any amount of credit for the input tax and also carry over the credit for input tax. In December, the GSTR-2B was introduced, which basically shows all the supported tax credit that one is eligible for and shows the invoice price, the provider. Tax filing has become much simpler now because the taxpayer does not have to calculate how much entry tax credit they get from each invoice. At the same time, those trying to get an excessive tax credit on inputs will be deterred.
The third factor is also very important. We now have income tax data that includes GST and then customs and we are in a position to do data analysis through artificial intelligence tools. We can draw a complete network diagram if any fake or nonexistent dealer has generated a fake invoice. No matter how many brokers or shell companies the bogus invoices went through, we can get to the bottom line and the result was that more than 187 arrests were made during the last month and a half that included CEOs, directors, partners. and five public accountants and a company secretary were also arrested.
The fourth factor that I would like to mention is that we incorporate this electronic invoicing. This started from November 1. It has completely stabilized for companies that have a turnover of more than Rs 500 crore. Now companies that have a turnover of more than Rs 100 crore must also issue invoicing.
So you are saying that you have been able to counter many people who until now played with the system. But how sustainable is this trend of Rs 1.15 million lakh? Is it a one-time thing?
We have introduced changes at the systemic level. All of these measures will ultimately lead to better compliance and which, together with increased economic activity, will lead to better revenues.
What is your assessment so far in terms of direct and indirect tax collection?
We have already discussed the GST measures. On the customs duty front too, in December we had a very good collection. It’s something like 16 billion rupees. Last year in December, the collection was Rs 8,300 crore, making it an increase of almost 94%. But the assessed value has not increased by that proportion. The taxable value has increased by only 17%, although the collection of customs duties has increased by 94%.
Similarly, if direct tax, corporation tax and personal income tax collection are compared with last year’s figure, up to the second quarter we fell by almost 22-23%. But at the end of the third quarter, the gap has narrowed to 9.9% and we expect that in the next quarter and at the end of the financial year this gap will narrow even more. How much will the gap ultimately be, how much exactly will we collect in indirect tax or direct tax, since there is a quarter left and we are in the middle of the budget year. So we will do a revised estimate of the amount of revenue we will collect under each of the revenue headings and then upload it during the budget.
Last year, in terms of direct tax collection, we were able to get approximately Rs 10.8 million lakh. Will we be able to reach that mark this time?
It is very difficult to give a definite figure at this time. I can only tell you the trend. In direct taxes, we dropped 9.9%. Now when it comes to indirect tax, we’ve already talked about the GST. In both indirect and direct tax, during the first three or four months, we had a very severe impact and it is very difficult for transactions that did not necessarily occur during the rest of the year and for the government to obtain tax revenues.
Therefore, all such evaluations must be performed. Currently, what all of us within the finance ministry are trying to evaluate is what we have achieved in these nine months and what we lost and then how much we can recover during the next three months and what the final deficit will be. . We can only notify you when we present the budget.
Right now, where do you see the end of the year?
Just look at the estimates of GDP growth for the first quarter and the second quarter. Some of these agencies, for example the RBI or international bodies like the IMF, the World Bank, all had given the first quarter estimates and of course it has already happened. The second quarter has also passed. Estimates for the third quarter would arrive. They have also given estimates for the whole year and they are in a certain range. Someone has estimated about 6-7%; someone has even estimated 4%. These are all ranges.
We also have data on certain parameters such as the PMI index, the e-way bill, the electronic bill, and electricity consumption that are showing a faster rate of recovery. That is combined with the actual tax collection we are talking about. We hope to enter positive territory. There is a faster rate of recovery. Exactly what the growth will be is something I would put off until budget time and at that point we will be in a position to give you a good idea of where exactly we will end up by the end of this year.
Do you think that if Covid cases were to increase, that could be one of the risk factors when it comes to India’s recovery?
When you are in the middle of a pandemic of this type that is going to continue for several quarters or months, the risks always persist. Therefore, what is most necessary is that as we head to the recovery zone, we do not lower our guard. People must continue to take precautions and then carry out economic activities and also at the same time we must continue to monitor the different sectors or the various groups to see how they are performing and if any intervention is needed we must be in a position. intervene and try to mitigate these measures.
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