GST - Discussion on all Aspects

[Dilbu]

The standard reaction from shopkeepers if you ask for a bill is that you will have to pay an additional 15% or whatever is the GST additionally if you want the bill. This tax amount hits the ultimate customer's pocket only as the shopkeeper can just report and pass on the GST to govt in his monthly return. If the customer wants no bill then there is no record of the transaction and no GST to report. Both the shop keeper and the customer are happy to do wink wink nod nod under this system. The only way to enforce compliance is strict scrutiny of sales turnover from shopkeeper's books.

[Aditya_V]

Shops generally come under composition scheme and pay 1.5% tax , such goods are aldready subjected to GST, so the loss will not be much, its factories and large services that matter. Further with digital payments big fish within India dont get away. The only real Avenue is net settlement outside India

[nandakumar]

Shops generally come under composition scheme and pay 1.5% tax , such goods are aldready subjected to GST, so the loss will not be much, its factories and large services that matter. Further with digital payments big fish within India dont get away. The only real Avenue is net settlement outside India

The way to defeat this is amend the GST law such that the 'compounding levy' is on the net turnover over and above the the invoice based sales. Then competition between two grocery stores (just as an example) will ensure that both have an incentive to stick fair prices. A second approach could be to ensure that the grocer leaves an electronic trail of his business volume. That can be achieved by creating an incentive for end consumers to use electronic payments. A half per cent credit into the bank account for the value of BHIM app payments should do the trick. I had in an earlier post said that Banking industry earns roughly Rs 16,000 crore in incremental income because people's propensity to use GooglePay like apps. The mechanism exists.

[srin]

I don't understand: if a shopkeeper doesn't declare the sale (ie, issue a bill and charge GST), isn't he losing out on input tax credit ?

[Manish_P]

..

BTW, try and ask any beardo weirdo for a bill and see the reaction

Concur, sir.

Forget the bill, even for payments they ask for only cash. UPI is taboo.

[nandakumar]

I don't understand: if a shopkeeper doesn't declare the sale (ie, issue a bill and charge GST), isn't he losing out on input tax credit ?

Under the relief to small traders, those that don't have a turnover a nominal sale (I don't recall the exact amount) they don't have to register under the GST. Those above that but below another threshold they have to register and file a sales return but pay only a nominal GST but without any input tax credit. In other words, they are treated like end consumers. The assumption is that a tax of a nominal 1% or whatever is a fair tax on the implicit trade margin that covers their value add, minus the input taxes paid by them.

[vijayk]

Corporate taxes went up when they cut tax rates.

Will GST compliance also improves if say 5,12,18 are changed to 5,10,15? Might even reduce some inflation.

[VKumar]

One major problem with GST is that the portal is not showing gst payments at time of imports and hence input is being denied worth crores of Rupees. Despite GST notification that BE can serve as proof of GST payment at time of imports, crooked gst officials refuse the same.

[Vips]

Interstate flow of goods rose to 70% of GDP post-GST implementation.

Paper published by IPPR suggests new indirect tax regime led to increasing economic integration among states.

The value of the inter-state flow of goods in India increased to about 70 per cent of GDP in FY22 from nearly 55 per cent in FY18, taking into account movements of domestic and imported goods, shows a paper authored by Bibek Debroy, chairman of the Prime Minister’s Economic Advisory Council (PMEAC), signalling increasing economic integration among states after goods and services tax (GST) was introduced.

The paper, published by the Institute of Public Policy Research (IPPR), and written by Debroy, along with his Officer on Special Duty Devi Prasad Misra, found for domestically produced goods the inter-state trade flow amounted to about 35 per cent of GDP in FY22, up from 23.5 per cent in FY18.

Further, internal trade appears to be growing at more than twice the pace of growth of GDP. In the four-year period, FY18 to FY21, nominal GDP grew 19.7 per cent to $3,173 billion from $2,651 billion, whereas the value of domestic goods transported among states increased 44 per cent, and the cumulative value of imports and movements of domestic goods increased 34 per cent.

“In many ways, this is indicative of the transportation efficiency gains that have accrued after the introduction of GST, as well (as) the enhanced economic integration of Indian states,” the paper reads.

GST, introduced in India on July 1, 2017, replaced a large number of national and state-level taxes and levies, thereby not only uniting India into a common market with minimal distortion and tax arbitrages but also putting in place administrative structures that provide for a regular reporting of tax data.

Using e-way bills as a measure, the paper notes goods belonging to sectors like textiles and textile articles; electrical machinery and equipment; machinery and mechanical appliances; iron, steel, and articles; and automobiles have been at the top in terms of movement from FY19 to FY21.



In terms of e-way bills, Gujarat has been the top state in inter-state trade, followed by Maharashtra, Haryana, Tamil Nadu, and Karnataka, the paper notes.

The paper also analyses the sources and destinations of goods by pairing states accordingly. This shows Maharashtra as the most important exporting partner for every state and also serves as the predominant importer of goods from almost every other state.

“Assam being at the other end of the colour spectrum - it ranks low in both exporting as well as importing relationships with all other states. More generally, states that are close to each other tend to trade more with each other, and states that are richer trade with each other more than with others – again underscoring the gravity effects of trade,” the paper said.

Besides, the analysis of distance travelled by goods, according to the e-way bill data, indicates a large percentage of e-way bills (58 per cent) travel within 200 km and may have implications for the possible location of manufacturing/trading hubs, because they could be located closer to the centres of consumption.

Also, around 17 per cent of the e-way bills pertain to goods that travel more than 1,000 km, which might reflect the likelihood that these may relate to export goods from the hinterland, en route to major ports on the eastern/western seaboard.

[Vips]

Maharashtra powers national GST mop-up.

Maharashtra continues to report the highest GST collection in the country, accounting for almost 15% of the national figure in 2022-23. Its GST kitty is also growing the fastest, with its compound annual growth rate (CAGR) between 2018-19 and 2022-23, outstripping all other states.

The latest data shows that Maharashtra’s GST collection for the financial year 2022-23 was Rs 2. 7 lakh crore. This is more than twice the collection of Karnataka which reported 1. 2 lakh crore, the second highest GST collection in the country. Gujarat was placed third with Rs 1. 1 lakh crore while Tamil Nadu reported Rs 1 lakh crore. The state CAGR between 2018-19 and 2022-23 was 12 which is 3%, which is higher than that of Karnataka which is at 11. 8% and Gujarat at 11. 7%. The state’s growth rate was much higher than the national CAGR which stood 11. 3%.

GST collection is a consumption-based tax and a key indicator of economic activity. It is the main revenue earner for the state and accounts for almost 60% of the state’s income.

Senior officials said the flow of investments into the state were a key reason for its pace of economic activity and higher GST collections. “Maharashtra is a key state for domestic and foreign investments. The GST department has also stepped up vigilance and cracked down on defaulters,” said a senior official. The state’s GST collection last year was 2. 2 lakh crore. This means that collections have risen by Rs 52,353 crore or a steep 24% since 2021-22.

The state’s eway bill generations are also the highest in the country. The state’s e-away bills for 2022-23 amounted to 15 crore, which was a 27% rise from the previous year.

By comparison, e-way bills for Gujarat amounted to 11. 2 crore, which was a 19% rise from the previous year. E-way bills track the movement of goods above Rs 50,000 in the state.

[VKumar]

One major source of GST for MAH is the import via JNPT.
However many importers are sore that input GST waa not reflected on the Portal as a result their set-off has been denied and they have to file appeal, which has its own cost.

[Vips]

GST evasion detection nearly doubles to Rs 1.01 lakh cr in FY23.

GST evasion detection by tax officers almost doubled year-on-year to over Rs 1.01 lakh crore in the just concluded 2022-23 fiscal, an official said. During the last fiscal, a recovery of Rs 21,000 crore was made by the officers of the Directorate General of GST Intelligence (DGGI).

The official said the government is taking steps to increase compliance and using data analytics and human intelligence to identify fraud.

"DGGI officers have detected evasion to the tune of Rs 1,01,300 crore in 2022-23. Of this, recovery of Rs 21,000 crore have been made," the official told PTI.

In 2021-22, DGGI, the investigative agency under the Goods and Services Tax (GST) regime, detected evasion of over Rs 54,000 crore and made a tax recovery of over Rs 21,000 crore. The total number of Goods and Services Tax (GST) evasion cases has gone up this fiscal with about 14,000 cases detected in 2022-23, up from 12,574 cases in 2021-22 and 12,596 cases in 2020-21.

The modus operandi adopted by fraudsters included short payment of tax by undervaluing taxable goods and services, wrong availment of exemption notifications, wrong availment of the input tax credit, non-payment of tax on supply of taxable goods and services (clandestine removal), and fraudulent availment of the input tax credit on the basis of invoices from fake firms.

In a reply to the Lok Sabha last month, the Finance Ministry said total GST evasion detected between July 2017 to February 2023 was close to Rs 3.08 lakh crore, of which over Rs 1.03 lakh crore was recovered. GST authorities had arrested 1,402 persons for evading taxes in the last five-and-a-half years till February 2023.

[rajkumar]