The Goods and Services Tax collections, according to official data, crossed the Rs one- lakh mark in April. Actually, the total receipts were Rs 1,03,458 crores. The Government has reason to smile. After the initial hiccups, major and minor snafus over a flawed design of the GST platform and an overburdened website, the GST was, after all, adapted by the taxpayers. The criticism that it was badly designed and hurriedly implemented without consideration of the users’ interests is now a thing of the past.
Both the users and the GST software processers have overcome the initial problems to provide an efficient and responsive platform. In the coming days, more wrinkles could be ironed out in order to make it easy for the tax-filers to make trouble-free payments. Contrary to the criticism that the Government showed undue haste in implementing the GST, the April receipts show that in a matter of months it has proved its point. You cannot learn swimming sitting on the banks of a river; you learn it by taking a deep plunge into the water. Yes, there were some avoidable hardships faced by the taxpayers but this was a small price to pay for finally introducing a revolutionary tax system which replaced the old and antiquated system of nineteen different taxes and levies with all its attendant bureaucracies and corruptions and distortions.
One-country, one-tax being the motto of the new system of taxation, this is being constantly fine-tuned by the finance ministry in conjunction with the IT experts and other professionals. In other words, the alleged hurry in introducing GST was well worth the trouble, as borne out by the record over Rs One lakh crore in collections in the first month of the new financial year. Clearly, the digitisation of the tax process, including billing, receipts, etc, has spurred higher collections. Lots of people, who hitherto were not paying taxes, have felt encouraged to do so out of fear and also because of the simplification of the taxation process.
Whether the monthly filing in the case of middle-income taxpayers can be made quarterly is a question that is engaging the attention of the authorities. But for the sake of convenience, this should be done for middle-income taxpayers. Compulsory online filing of returns is a source of much trouble for a section of the taxpayers; the Government should consider payment with the levy of a small fee through designated banks and other financial institutions.
Of course, the record April collections indicate lesser evasion and even a pick-up in economic activity. The sharp rise in the number of tax-filings, income tax and GST, would suggest that the twin policy of coercion and persuasion adopted by the Government to make people pay their due to the public kitty for nation-building is having an impact.
Thanks to the demonetisation, the number of people filing income tax returns had jumped sharply, though a good percentage paid little by way of taxes. Yet, they had come into the tax net. In the case of the GST, since its introduction in July last year, the number of people filing it has steadily grown. In fact, the percentage of people filing it on schedule has risen from 57 in July to 63 in March this year.
Overall tax compliance by registered tax payers is now a satisfactory 85-87 percent. With the introduction of e-way billing for goods moving from one state to another, or even within the same state, the tax evasion is bound to become further hard. E-billing will cut costs and time in carrying goods from one State to another without the toll booths, corruption at the octroi stops, wastage of fuel by the goods carriers, etc. Also, it will help eliminate tax evasion by goods manufacturers.
Meanwhile, whether the over Rs one lakh GST collections indicate a firm trend of economic growth is hard to say, though a few key sectors such as steel, automobiles and cement seem to be doing well. With a normal monsoon prediction, and a spurt in job creations in recent months, it is likely that the growth rate might be well above seven percent despite the rise in the global oil prices.
