GST at nine-month high

The Goods and Services Tax collection has crossed Rs 1 lakh crore (Rs 1 trillion) for the first time in April this year. It is indeed a feat as the new indirect tax regime had passed through several initial hiccups in the past nine months, including a decline in revenue collection. This new achievement indicates that the reform that was launched in July last year is moving towards stability. The new tax regime would have stabilised earlier had the government accepted suggestions to make the regime simpler; fewer tax slabs and lesser compliance burden. There is still scope for improvement. A uniform, nationwide tax regime needs to be simpler, devoid of frequent bureaucratic interference and it must shun Inspector Raj.

Voluntary compliance can be encouraged, not by searches and seizures, but by providing incentives. The Finance Ministry must propose an incentive package to the GST Council to involve more and more businessmen into the fold of the new regime. This will certainly help to boost numbers of the GST returns.

The latest collection figures are encouraging, but do not indicate a trend. The Finance Ministry very well understands this. Therefore, it is rightly cautious. Although the ministry said the buoyancy in the tax revenue collection reflects “upswing in the economy and better compliance”, it quickly clarified that the higher collection could be due to people paying “arrears” of some of the previous months. Indeed, a one month figure, particularly for the last month of the fiscal, cannot be taken as a trend. The introduction of e-way bill is a good move that is likely to maintain the positive revenue collection trend. It will, however, depend on its effective implementation and monitoring. The GST regime is still new; therefore, both the Finance Ministry and the GST Council must keep themselves open to practical suggestions. One of the suggestions is to consider inclusion of petrol and diesel in the GST, which will not only make the fuel cheaper for the common man, but also make it truly a “one nation, one tax” regime.