In light of the dismal goods and services tax (GST) collection, West Bengal Finance Minister Amit Mitra (pictured) has written to his Union counterpart Nirmala Sitharaman, urging her to convene a GST Council meeting “urgently” to exclusively discuss revenue augmentation and tax fraud detection.
GST revenue fell below the Rs 1-trillion mark for the third straight month in October, and was 5.3 per cent lower than the corresponding month last year, at Rs 95,380 crore. In September, the GST mop-up had dropped to a 19-month low of Rs 91,916 crore.
“May I suggest that a meeting be convened urgently to discuss revenue augmentation and setting up of an effective mechanism to detect and avert tax frauds… we need to take a detailed look at the composition of revenue and sources from which they are not being effectively collected,” Mitra said in the letter. He requested that these issues be the focus of such a meeting, with “no other routine and procedural agenda items”.
In October, a 12-member panel comprising officers from the Centre and the state was formed to recommend measures for revenue augmentation.
The panel is examining a mechanism to plug loopholes that lead to evasion, and to increase rates where necessary. “I hear that a committee of officers has been set up to suggest measures to augment revenue… But is this enough?” Mitra questioned.
Pointing out that GST frauds, which ‘continue unabated’, could be a major reason behind lower collections, Mitra said that the development of business intelligence systems and dedicated units in each state were the “need of the hour”.
Minister of State for Finance Anurag Thakur had stated that Rs 44,466-crore worth of fraud was detected in the last two years, in reply to a question in the Rajya Sabha during the monsoon session.
A few days ago, the Odisha state GST authorities detected fraud worth Rs 138 crore. In September, the Directorate General of GST Intelligence (DGGI), on behalf of the Centre, detected fake input tax credit (ITC) invoices worth Rs 470 crore after conducting searches in 336 locations across 15 states.
“The proportion of such scams has crossed all limits over the last year or two. I believe this incessant leakage of revenue is among the important contributors to the falling revenue trend,” said Mitra.
He added that fake ITC meant tax lost, given that this ITC was not backed by transaction in goods or services in reality.
“Even worse is the fact that some recent reports have suggested that these chains appear to be ending in export… meaning not only are they not paying taxes, but are also actually getting cash refunds against ITC, even when actual business never took place,” said the letter.