Budget 2021 will address woes of affected sectors, says Finance Secretary

AJAY BHUSHAN PANDEY says litigants in more than 96,000 appeals - involving disputed amounts of Rs 83,000 crore - have opted for the Vivad Se Vishwas scheme, which has been extended by a month

Finance Secretary AJAY BHUSHAN PANDEY attributes the record December goods and services tax (GST) collections at Rs 1.15 trillion to economic recovery and the government’s measures to address tax evasion. In conversation with Dilasha Seth and Indivjal Dhasmana, he says litigants in more than 96,000 appeals — involving disputed amounts of Rs 83,000 crore — have opted for the Vivad Se Vishwas scheme, which has been extended by a month. Edited excerpts:

Will the new Covid strain further heighten economic uncertainty? How will this impact the Budget-making exercise?

We are living in times of uncertainty and the new normal. Certain sectors continue to be impacted. Budget will address concerns of the sectors affected.

The GST collections in December touched a record high, despite lower e-way bill generation in November. Are tightened compliance measures introduced to plug evasion or economic revival a trigger?

In November, there was a resurgence of Covid cases. There was restriction on the movement of goods since there was lockdown and curfew in many parts of the country. Therefore, the e-way bill figures of November are lower than October’s. In December, they were higher than October’s and were at 64.2 million. The record high GST collections in December are indicative of two factors: one, the economy is on the path to recovery. Two, there were many systemic changes introduced in the past few months, which were reflective of the higher collections. The e-invoicing system has stabilised, with 60.3 million e-invoices generated in December alone.

The industry feels that the restriction on the use of input tax credit and further blocking of credit on missing invoices infringe upon their basic right to credit?

These measures have been introduced for only those few thousand companies on the wrong side of the law. In a tax base of 12 million, there are a few thousand entities having issued invoices worth hundreds of crores of rupees, but their income-tax (I-T) profile shows they have either not filed returns or have declared an income of Rs 2 lakh or thereabouts. Therefore, if any restriction is imposed on such a class of tax evaders, how will it affect the rights of a genuine business?

Since the economy is on the road to recovery, what is your projection for the current fiscal year?

There are various agencies, including the Reserve Bank of India, World Bank, and the International Monetary Fund, and economists having made their estimates. They have revised their own estimates. But one common thread through them is the extent of contraction having lowered.

Is the GST collection at Rs 1.15 trillion sustainable?

We have made systemic changes to the GST processes, and will continue to take targeted action against those who indulge in tax evasion. These should continue to yield results and impact GST collections positively.

The direct tax numbers have shown significant improvement in the past two months. Are you hopeful that the collections this year will be closer to last year’s Rs 10.6 trillion?

In the case of direct taxes, we were down 9.9 per cent by the end of December, with Rs 7.68 trillion as gross direct tax collection. The issue is that in the first two quarters, turnovers of companies got impacted. If there is a fall in turnover, the impact on direct tax is far greater and may even push a company into losses. Also, we have reduced the tax deducted at source rate by 25 per cent and abolished the dividend distribution tax. Yet our gap is 9.9 per cent. It will be difficult to give a definitive figure as to how much we will collect in the next three months. Whatever is our assessment, it will get properly reflected in our Revised Estimates of the revenue receipts in the Budget.

The Vivad Se Vishwas direct tax dispute resolution scheme has been extended by a month. How has the response been so far?

By December 31, more than 96,000 of the 510,000 pending appeals had opted for Vivad Se Vishwas. The dispute amount in these cases was worth Rs 83,000 crore. They have time until March 31 to make payment. Now that we have extended the date of declaration to January 31, we expect many more people to opt for the Vivad Se Vishwas scheme.

Will there be issuance of refunds, and to what extent?

The entire Rs 83,000 crore will not come to the department. The main objective of this scheme was to resolve disputes and free taxpayers from long-pending legacy disputes.

In the case of Customs, there is significant improvement in collections over the past two months.

If you consider the Customs revenue and compare the December figures with that of last year’s, the import assessable value has increased 16-17 per cent, whereas Customs duty collections have gone up almost 94 per cent. There is a very significant jump in Customs duty realisation. We have not increased the Customs duty rates substantially in the past one year. Maybe the composition of goods being imported has undergone some change. Our actions are focused not only on GST, but also on Customs and I-T. We are seeing the overall impact of higher compliance because there is a faceless system in Customs as well. The tendency to understate or undervalue dutiable goods, too, is being brought in check.

But the industry has been complaining about inordinate delays in consignment clearances due to the introduction of faceless assessment in Customs.

We are trying to ease this process. We have given a definite timeline for action. If a case gets assigned to a faceless officer for the assessment of Customs duty, he has to take a decision within a time frame. Higher Customs duty collections in the past two months would not have happened had there been large-scale delays.

Will the proposal to revise GST rates once a year be taken up at the next GST Council meeting?

There are certain items on the agenda, such as correction of inverted duty and rate rationalization, that got deferred due to the Covid-19 pandemic. The deferred items will be placed for discussion at the next GST Council meeting. The meeting needs to take place at least once in a quarter — the date for this quarter has not been decided as yet.