With GST collections picking up, data analysis across direct and indirect taxes to identify evaders is helping to improve efficiency for revenue collections. The tax department has identified 20,000-30,000 cases for turnover mismatch out of a total GST tax base of 1.2 crore and 7,000 companies have been acted upon over the last 1.5 months, Finance Secretary Ajay Bhushan Pandey told in an interview. Declaring different turnover in Customs, in GST, and in income tax is now not possible, which is sending a right signal, Pandey said. Excerpts:
GST collections have been better. How has been the revenue trend for direct taxes?
For direct taxes, till December we are down by 9.9 per cent if we compare year-on-year. But we have to keep three things in mind: the corporate tax, the income tax or the direct tax is the tax on the profit or the tax on the income and income is not always linearly proportional to the turnover or the business volume. Because if the volume goes down below a certain limit, then instead of income being proportionately down, it might get into the negative territory and it may result in loss. Then it can completely rule out any tax payment from that taxpayer.
So, during the first two quarters whatever the turnover loss has happened, therefore, the income lost is lost. Considering this and other reliefs during Covid pandemic: the TDS rate was brought down by 25 per cent. We get a lot of tax collection from TDS. The rate has been reduced, so that also will have an impact on revenue. Further, in this year, the dividend distribution tax has been abolished, so because of that also we are not getting that tax. Considering these factors, the 9.9 per cent decline shows that the economy is recovering. It also demonstrates that there has been an increase in collection efficiency. Because what we are observing in the indirect taxes, i.e., the GST and customs is also getting reflected on the income tax front also.
Read Also: GST Collection hit a record high in December 2020
We are combining all data from customs, GST and the income tax. People till a few years ago could exploit information asymmetry and could declare a different turnover in the Customs, in GST, and different in the income tax. Now those things are not possible. They are now able to see in their returns itself how much income or how much turnover they have disclosed to the other authorities. That itself is sending a right signal and people who earlier were trying to take advantage of this information asymmetry, are being deterred and that is getting reflected into the higher collection efficiency.
Are there any numbers for this data analysis with respect to the revenue collected?
In case of GST, in total tax base of 1.2 crore, we have identified 20,000-30,000 cases where people have shown a disproportionately high turnover in GST but have disclosed zero or near zero income in their income tax returns. We are using data analytics and artificial intelligence tools and that is precisely the reason that during the last 1.5 months, about 7,000 companies were identified, they were subjected to action, more than 187 people have been arrested, including five chartered accountants and one company secretary. Managing directors, partners, proprietors of companies have been arrested.
In several cases, I wouldn’t name them; many large companies also have been found to have been involved in taking fake bills from non-existent companies through multiple layers. Because of technology today, no matter how many layers one can put, we are able to reach the ultimate beneficiary and we are able to take actions against them.
Read Also: GST E-invoicing mandatory if turnover exceeds Rs. 100 Crores w.e.f. Jan 1, 2021
GST collections have picked up, so the calculations for compensation cess deficit must have changed.
Yes, to some extent the figures that we had given for the shortfall there could be some change. It will have to be worked out, but what will be the full extent, we will have to watch for the next three months. For the past 2-3 months, we had a reasonable level of collection, but to what extent our shortfall would be reduced and to what extent it will meet that compensation gap, we will have to wait for the figures in the coming months.
One of the concerns on the fiscal deficit front has been that it’s more because of revenue slowdown rather than increase in government expenditure.
If you have this kind of a pandemic — where in the first six months we were severely impacted in the sense that businesses suffered lockdown, movement restrictions, and demand in certain sectors were also affected — and even though the economy is on the recovery path, certain sectors are still impacted. In such cases, the revenue will get impacted and it is the worldwide trend. But this is also the time where the government needs to continue to expend in areas where they are required and therefore, this is something which is on the expected lines that the revenues will fall.
With all the measures, we are trying to increase the collection efficiency, if there are any gaps or certain evasions are happening, or if some system could be improved, then (we can) increase the collection efficiency so that the gap becomes lesser.
Read Also: GST Turnover v/s Income Tax Turnover
The deadline for the Vivad se Vishwas scheme has been extended. It was introduced in the last fiscal, how much scope is there for extension and how have the collections been under it?
Even though Vivad se Vishwas was introduced last fiscal, it was towards the last part of it, March 15, 2020. Within one week of the announcement of the scheme, Covid happened and we extended the date till December 31. Till December 31, about 96,000 cases have come, the total number of appeals pending in the various appellate courts are about 5,10,000. The 96,000 cases have a disputed amount of Rs 83,000 crore.
How much has been collected?
The payment date is March 31. We are currently working with the taxpayers or the people who have filed appeals at various levels and saying look, this is the disputed amount and would you like to come forward. So, we are facilitating them and that’s why 96,000 people have come. We have further extended the date till January 31, and we hope that this number will further increase.
Read Also: Declare Income only 8% of turnover – Section 44AD Of Income Tax Act, 1961
In these 96,000 cases, some cases would require the tax department to issue refunds? So, what is the net amount collected?
Yes, that’s correct. We will have to work out.
Numbers so far show that the major share has been of PSUs.
Out of the 96,000 cases, number-wise the majority are private people. Majority of PSUs will be in terms of value.
When the Budget was presented for this fiscal, the tax targets were seen to be very optimistic. Going ahead, how realistic will be the targets?
Because of this pandemic, many of those calculations have to be reviewed and that is precisely being done during the budgetary exercise. So, we are closely reviewing our revenue figures, how much we will get with all these measures, how much we expect to recover during the next three months. And then similar exercise is being conducted on the expenditure side. Aatmanirbhar packages have been given and then certain areas which require interventions, expenditure is being done for them despite the constraints on the revenue front. Once we firm up our revised estimates, both on the revenue and expenditure front, they will be presented at the time of Budget.
Read Also: Maharashtra GST Department issued General Procedure for GST Audit
How do you see revenue collections going ahead?
We are positively and certainly into the recovery zone which is reflected through these hard numbers. The GST numbers we have seen, even in the direct tax numbers we just discussed. On the Customs front also, the collection in December has exceeded Rs 16,000 crore, which compared year-on-year is almost 94 per cent increase, while the assessable imports value has increased only by 17 per cent. We are on a definitive growth path and we will continue to grow upwards.
Are there any further stimulus measures being planned. Because earlier timing or identification of beneficiaries were cited as issues to provide more stimulus from the government.
Now that we are reaching close to the Budget exercise, it also gives an opportunity to look at all the suggestions, demands and recommendations of the various stakeholders, industry associations and state governments, ministries, MSMEs and taxpayers. We will see what best we could do to address them.
Disclaimer:The article or blog or post (by whatever name) in this website is based on the writer’s personal views and interpretation of Act. The writer does not accept any liabilities for any loss or damage of any kind arising out of information and for any actions taken in reliance thereon.
Also, www.babatax.com and its members do not accept any liability, obligation or responsibility for author’s article and understanding of user.
For Collaboration with us-
- Mail us at [email protected]
- Whatsapp us at +91-7024984925
