GST mop-up will touch Rs 1 trillion a month in FY19, says Hasmukh Adhia

Refunds have improved substantially now, 90 per cent of claims have already been approved or rejected

As GST rollout is to complete a year in a few days, finance secretary Hasmukh Adhia tells Dilasha Seth and Indivjal Dhasmana that the system has perfectly stabilised now. Adhia, who played a critical role, in the roll-out says bringing petroleum under GST is no solution to their high prices. Edited excerpts:

After the GSTN portal crashed in initial months and then at a time of original date of e-way bill, has the GST system stabilised now?

I may beg to differ. There was no crash of the portal, there were minor glitches initially in certain applications. Those were set corrected very soon. Of course, the system has perfectly stabilised now.

Both the Centre and states collected less than the target in the first eight months of GST roll out in 2017-18. Do you think the target will be met in the current financial year?

I think it is now improving significantly. The lowest record was in the month of November, 2017 when collections went down to Rs 830.78 billion. From there, we have been increasing our revenues. Next month, it was Rs 840 billion, then Rs 890 billion, followed by Rs 920 billion, then of course the highest figure of Rs 1.3 trillion for March which was paid in April. In May, we again got Rs 940 billion. It has been steadily improving. March, paid in April, has always been the highest. If we remove that, we are on a steady path now. Our target should be Rs one trillion a month on an average this year. We hope that this would be met. In the first few months, it may be little less than Rs one trillion, but it would show a rise over the remaining months of the year.

If you are so hopeful, why did you shoot off a letter to field officers to shore up revenues?

Not for that reason.

Was there any apprehension that desired revenues will not come?

No, no there was no such apprehension. We do want all officers to continue to do good work.

Are you factoring in any possible inclusion of petroleum in GST when you make these calculations?

No.

The next GST Council meeting is slated to be on April 21. Will the inclusion of petroleum be considered there?

I am not too sure.

Natural gas, ATF?

We will finalize the agenda in due course.

But bringing petroleum under GST would solve the problem of high prices...?

I don't think so. GST is not solution to this problem.

A few states such as Maharashtra have also recommended doing so. Have they not?

I have not got any formal suggestion from Maharashtra so far. It is for the GST Council to take a view. No one state or the Centre alone can decide on the issue. All states have come on board.

A few states have suggested bringing petroleum under GST and simultaneously allowing states to impose VAT over the peak rate. How feasible is the suggestion?

What will be the benefit of bringing it under GST, then? If you have three taxes then, apart from the existing two taxes, there will be multiplicity of taxes.

They are saying two taxes -- GST and VAT and no excise duty...?

What will we do with our fiscal deficit  then. These are all simplistic proposals. These have to be discussed threadbare and then taken a call.

Is there any thinking in the government to cut excise duty on petrol and diesel?

Today, we will talk about only GST.

What is the next level now after one year -- converging of slabs?

Our main thing has to be that return filing becomes very very smooth. Number two, our revenues have to stabilise. We have promised a very ambitious growth rate of 14 per cent to the states. We have to keep up that promise. The Centre should also get 14 per cent, after giving compensation to the states. That is our main concern as of now. After that, lot of other reforms can be done.

Will rationalisation of rates be taken up in the next Council meeting?

It has not yet been decided.

Has there been an agreement on the sugar cess?

A group of ministers was constituted. It has not yet given its report. The report will go to the Council.

The GSTNetwork (GSTN) is being changed into a government company now. How long will it take to do so?

It is not going to take long. It is a matter of taking the proposal to the Cabinet and getting its nod.

Will that impact the functioning of GSTN?

I don't think so. A flexibility of retaining the same staff will be given.

What is the progress in the return simplification process?

We have designed the new return. The software work for that will start shortly. We hope to do this witin six months. By end of this calendar year, we will be able to come out with the new mechanism.

Is there objection to the fact that input credit of buyers could be reversed in the ultimate phase?

There is no provision of automatic reversal of credit in the new system. We will keep on feeding the assessees with the gaps that are found in their returns. A gap between what they are claiming to be input tax credit vis-a-vis what is their eligibility, based on the invoices uploaded by their sellers. That gap will be constantly informed to each taxpayer every month. They will have to keep pursuing their sellers about uploading their missing invoices. We are not going to do any reversal for six months initially, and then three months.

Is it not too much headache for buyers to pay taxes for sellers if they go missing?

It is important for buyers not to engage with fly-by-night operators.

Exporters, medium and small enterprises are all crying for refunds? What is the progress in that respect now?

Refunds have improved substantially now. Ninety per cent of claims have already been approved or rejected. Rs 380 billion has been refunded and claims for another 30 billion have been rejected.

  

HSBC in a recent report has said that GST has failed to formalise the economy and use of cash has increased. Is it so?

I am not too sure about use of cash. However, formalisation of the economy means that some of the stakeholders who were not filing their returns have come to the tax net. Is it not enough that we have got 4.5 million new tax payers under the GST compared to the previous tax regime.

But, various experiences tell us that the people have already found their way to evade GST or not to give receipts. Do you agree?

It would be increasingly difficult. First, the moment we have a new system of return filing, there would be one-to-one matching possible. Even now we can do gross level matching. But after the new system, every invoice can be matched. Because GST is I-T driven, it is very difficult for anyone to under-report his turnover. He may do so now, but he will have problems in the future.

Does Malaysia scrapping GST worry you?

No, because we are confident about our system. Our system is more stable than others'. There is no inflation because of GST. Most countries, say for instance Australia faced major problems due to high inflation when they had introduced it. Thanks to our four rate structure, the common man did not face inflation even as the structure was criticised by many.

                             

The Council has been deferring tax collected at source. On Tuesday as well, there was one more round of postponement. How many times more will TCS be deferred?

Unfortunately, the software for TCS and connectivity with accounting software is still not ready. You have to ensure that TCS that we deduct has to go to that person’s account. That software has to be built.

Is this the last three-month extension?

Yes.