Filing of GST returns doubled due to ease of compliance: Vivek Johri

It is clear that GST is levied on the value of services provided by cryptocurrency exchanges and not on the gross value of the transaction. However, there is still ambiguity over some types of transactions referred to as “actionable claims”. When can one expect clarity on this?

We are investigating it. There is a process we go through. We do this internally. Then we take it to the Law Committee (of the GST Council). Then it goes to the council. This may take two to three months.

What are the changes made in the proposed Customs Duty and GST in the Union Budget for FY 2013?

Simplification of tariff structure in Customs is one of the broad themes in the FY23 budget. The second is to support an Atmanirbhar (self-reliant) India, support exports and support micro, small and medium enterprises through some tweaking of customs duties. On GST, we have tried to align the law with the new tax return filing architecture. The law was framed with a different return system in mind. The GST Council has decided to adopt the new return architecture and the law will have to be integrated with it. This is the main import of changes on the GST front. In addition, there are some trade facilitation measures and one or two enforcement measures to deal with bogus tax credits and counterfeit invoices.

The GST rules have recently been tightened considerably.

We have tried to strike a better balance between taxpayer convenience and enforcement as we have found in 2020 based on our experience that there were a large number of cases and dealers who tried to misuse the input tax credit scheme through fake invoices. Were trying to. So we had to change our strategy to deal with it. However, that’s not the only way we’ve dealt with it. We have also tried to simplify the process of filing returns. We tried to rationalize the late payment charges so that the charges for late return filing are not difficult especially for small taxpayers. The administrative measures we have taken for better compliance, such as persuading non-filers and those who have stopped filing, we have also undertaken outreach programs. All these have helped in improving compliance and this is the reason why such a huge improvement can be seen in GST collections.

How has tax compliance improved?

The percentage and number of return filers have increased significantly. They have almost doubled. Till a year and a half ago, the return filing was hovering at 45-50%. Now it is 90%.

You have about 12.8 million taxpayers. This is the total tax base for GST and about 2 million leave the system and another 2 million join every year. Basically, this is the numbers game. Out of this, around 4.8 million taxpayers have opted for quarterly return filing and monthly tax payment scheme. If you take out 4.8 million for composition dealers (quarterly return filers under another scheme) and something else, you will be left with about 7 million taxpayers for monthly return filing. About 90% of them file on a monthly basis. I am talking about 90% of eligible taxpayers who are filing returns on a regular, monthly basis. (Earlier it was 45-50%.)

With the change in the structure of return filing, we have not only simplified the process, we have made everything more transparent and visible. There is self-motivated discipline due to which we have been able to reduce the extra margin we were giving in claiming tax credit.

We have now made return filing sequential. We have said that if you have not filed GSTR1 (Return showing sales) then you cannot file GSTR 3B (Return showing Monthly Summary of Transactions). You might call all these changes in the law strictness, but they are actually measures of rationalization. They are to protect the user of input tax credit from being exposed to a situation where the supplier (seller of goods or service) has not uploaded certain invoices or has uploaded the invoices but has not paid the tax. There is better payment and filing discipline once we have made these changes. This is getting reflected in the GST collection no.

You recently asked officials to be fair and just in implementing the new compliance-enhancing rules. what did you say?

The message is about the type of system we are trying to install. We do not want a system where there is too much discretion in the hands of individual officials without any information. We wish to assist them through data analytics so that any option of the taxpayer opting for scrutiny is subject to rigorous scrutiny, be it on the Customs or GST side. It will be based on scientific method.