GST collections decrease, the cost of compliance increases

As the monthly collections of GST are lower than the target number, tax officials are under increasing pressure to stop evasion, which in turn makes things difficult for companies and industry.

Consider this As a measure to stop the evasion of GST, the electronic invoice system for all interstate movements of goods was launched on April 1, 2018, and Karnataka State is the first to make it operational. However, almost two years after its introduction, electronic invoices remain a pain point for the industry.

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E-Way Bills

The transit of goods from one place to another, either interstate or intrastate, and with a value greater than Rs 50,000 is facilitated by the presentation of “E-Way Bills” on the common GST portal.

Problems related to the E-way Bill bill states that the process is an important buffer and should be eliminated with the introduction of electronic invoicing.

This will be a definitive classification of companies with a rigorous evaluation of their performance in innovation, financial health, and financial growth.

With the introduction of GST, the cost of compliance should have dropped, but practically the cost of compliance has multiplied. With the electronic invoice, there is a great requirement to open stores in different areas because the electronic invoice expires. It’s only one day for every 100 kilometers.

Although the electronic bill can be rectified or revised, the process is quite cumbersome. The extension of the electronic invoice is done when the carrier applies. But, in reality, thousands and millions of buyers continue to pick up merchandise after electronic invoices have expired.

Recently, exporters have faced scrutiny for claiming excessive tax credit to inputs and tax authorities have identified people who have probably evaded taxes.

Consequences of bad practices and evaded taxes

The government has presented a list of risky exporters and they have about 5000 odd exporters on that list. According to the government, these exporters have committed some bad practices and evaded taxes.

Even customs officials have become openly active due to the risky list of exporters, which has caused shipments to get stuck. It’s a full challenge, especially in the craft sector where you need to constantly innovate, you need to present new products because the buyer asked a new product every time. If the shipment gets stuck, it is difficult for exporters to survive. When the shipment gets stuck, it stops the whole cycle.

GST collections

As GST collections are lower than the target number, tax authorities have been under increasing pressure to stop evasion. Possibly two or three months in a year when the collections crossed Rs a lakh crore.

These are typically around the holiday season and around April. This year’s performance was better than the previous one in terms of GST collections.

Have been seeing a slowdown in consumption is also hurting tax collection and a prolonged period of economic uncertainty will push further.
The encouragement by us people to spend and consume more and also there is a philosophy that if they have tax rates slower, increment in compliance, lower prices, so people also consume.

The tax collection of a nation is an objective assessment of its market. If the markets have shrunk, you can call it a recession and not a recession. The fact is that consumption has been reduced and, therefore, there is a lower tax collection.

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