CBIC chief Sanjay Kumar Agarwal on Thursday said increased monthly GST collections are mainly on account of higher compliance, and the GST Council’s decision to tighten return filing and registration process would help reduce fake ITC claims in evasion prone sectors, including iron and steel.
Agarwal said the Central Board of Indirect Taxes and Customs (CBIC) has received suggestions regarding streamlining tax rates in evasion-prone sectors and all that is being discussed.
The Goods and Services Tax (GST) collection was Rs 1.87 lakh crore in April and in the first four months of the current fiscal, the collections have averaged Rs 1.67 lakh crore.
“The buoyancy of revenue is 1.43 of nominal GDP growth meaning thereby revenue collection is not entirely on account of growth in GDP, but a major contribution is made by increased compliance level,” the CBIC chief said at the Ficci Cascade event here.
Tax buoyancy explains the relationship between changes in government tax revenue growth and changes in GDP.
To enhance compliance, the department has taken a soft approach of nudging taxpayers for timely and accurate filing of returns and selecting taxpayers for scrutiny and audit by risk analysis.
“Less than 1 per cent of taxpayers are selected for scrutiny by way of audit based on risk behaviour analysis,” Agarwal said.
Agarwal said the government is taking all possible measures to encourage tax compliance and dissuade fraudsters from entering the GST system.
“The recent decisions in successive council meetings to make changes in return filing are in that direction so that menace of fake ITC can be curbed,” he said, adding that many sectors, like that of iron and steel, are impacted by the menace of fake input tax credit to a large extent.
Agarwal said that the solution to deal with fake ITC generation is quite complex and the department has received various suggestions regarding rates.
“It is being discussed. It’s not just iron and steel but other sectors also,” he said, adding that the GST Council’s recent decision on the return filing and registration process would help in solving the problem of fake ITC and fake businesses.
In June, CBIC introduced validation and risk rating for GST registrations, as it looks to curb fake entities issuing fake bills just to claim ITC benefits and defraud the exchequer.
In a two-month-long special drive to detect fake registration, the CBIC officers have identified over 9,000 bogus entities and detected about Rs 11,000 crore worth of GST. Recovery of over Rs 45 crore was made.
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