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NEW DELHI: Increased economic activity is anticipated to end in improved tax mop-up within the coming quarters, finance secretary Ajay Bhushan Pandey stated on Wednesday as GST collections from the sale of items within the home market virtually reached final 12 months’s stage in June.
“Although things seem to be looking better in terms of the economic activity, the collections in June also reflect a part of the payments for previous months as we had given an extended deadline for those months on account of Covid19 situation. The overall trends are encouraging because we had lockdown in a large part of May and in June there was higher activity, which will show in next month’s collections,” Pandey instructed TOI in an interview.
He additionally stated GST compensation course of is being debated in mild of slower progress. “There is discussion around how we can increase collections, whether it can through a correction of inverted duty structure, rationalisation of rates or other steps.”
Pandey stated the image on the direct tax entrance was not as grim as was made out to be. “In the first quarter, the revenue from income tax and corporation tax is 77% of the last year’s level on a gross basis, which includes advance tax and TDS. While we compare the tax collection with that of the last year, we also need to consider that the corporate tax rate was higher at the rate of around 35% when the first installment of advance tax was paid last year, and it came down subsequently to about 25%. Plus, in this quarter we had Covid situation and lockdowns in most parts of the country, which also impacted profitability of companies.”
While the highest bureaucrat appeared to be happy with the general progress of GST over the past three years, he stated that the federal government was working to enhance the taxpayer expertise and make the submitting system glitch-free.
Dismissing ideas of a friction between the Centre and states over compensation cess, Pandey stated, the GST Council was taking a look at a number of choices to tackle.
“Last year, there was some slowdown and rates were also changed so collections did not match the requirement. If collections are impacted, and 14% growth in collection is not achieved, the GST Compensation law itself provides for dealing with the situation and that is what is being discussed in the council.”
“Although things seem to be looking better in terms of the economic activity, the collections in June also reflect a part of the payments for previous months as we had given an extended deadline for those months on account of Covid19 situation. The overall trends are encouraging because we had lockdown in a large part of May and in June there was higher activity, which will show in next month’s collections,” Pandey instructed TOI in an interview.
He additionally stated GST compensation course of is being debated in mild of slower progress. “There is discussion around how we can increase collections, whether it can through a correction of inverted duty structure, rationalisation of rates or other steps.”
Pandey stated the image on the direct tax entrance was not as grim as was made out to be. “In the first quarter, the revenue from income tax and corporation tax is 77% of the last year’s level on a gross basis, which includes advance tax and TDS. While we compare the tax collection with that of the last year, we also need to consider that the corporate tax rate was higher at the rate of around 35% when the first installment of advance tax was paid last year, and it came down subsequently to about 25%. Plus, in this quarter we had Covid situation and lockdowns in most parts of the country, which also impacted profitability of companies.”
While the highest bureaucrat appeared to be happy with the general progress of GST over the past three years, he stated that the federal government was working to enhance the taxpayer expertise and make the submitting system glitch-free.
Dismissing ideas of a friction between the Centre and states over compensation cess, Pandey stated, the GST Council was taking a look at a number of choices to tackle.
“Last year, there was some slowdown and rates were also changed so collections did not match the requirement. If collections are impacted, and 14% growth in collection is not achieved, the GST Compensation law itself provides for dealing with the situation and that is what is being discussed in the council.”
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