The government is considering introduction of e-way bill on the movement of gold to plug evasion and arrest declining goods and services tax (GST) revenue collections.
To ensure that the movement of gold is not tracked by robbers or other anti-social elements, an encrypted version of e-way bill is being considered by a panel comprising central and states officials.
“E-way bill on gold is being examined by the law committee as a measure to tighten enforcement amid reports of GST evasion. But at the same time, it will not be easy amid security concerns. To address that, an encrypted version of e-way bill is being discussed,” said a government official.
Currently, the movement of gold is excluded from the e-way bill system.
Kerala has pitched for its inclusion in the e-way bill system. According to Kerala, in the pre-GST regime, the revenue collected from tax on gold was approximately Rs 630 crore at an effective tax rate of 1.25 per cent, as the state had composition scheme for them. However, at the existing rate of 3 per cent GST on gold, the revenue earned was just Rs 244 crore last year.
Kerala is of view that it is very easy for gold dealers to carry gold in suitcases and make sale of gold on the customer’s premises. The matter was also discussed in the GST Council meeting in June.
Haryana has also pitched for implementation of encrypted e-way bill within a fixed time.
“This might be a good way to address the security concern around movement of gold and help in plugging the tax leakage. However, given the nature of the commodity, administrating the e-way bill mechanism may not be easy, given that transportation may not require bigger vehicles. In this sector, incentivising the customers to purchase on payment of tax is also very important,” said Pratik Jain, partner, PwC India.
According to the report on revenue neutrality by former chief economic advisor Arvind Subramanian, the expected revenue from gold at the rate of 5 per cent of tax was Rs 10,000 crore.
Abhishek Jain, tax partner at EY, said: “Where the security concerns are well addressed through technology, implementation of e-way bills should help check tax evasions on supply of gold.”
The government had introduced the e-way bill system in 2018 for movement of goods worth over Rs 50,000 inter-state and intra-state.
“The e-way bill has played a major role in curbing certain leakages in the GST chain. Going forward, encrypted e-way bills for high-value products, further linkages with invoices for assessment, and input tax credits should be expected,” said M S Mani, partner at Deloitte India.
A few members of the law committee are, however, of the view that some other measures of enforcement must be arrived at other than an e-way bill as it could lead to security breaches. Besides, the threshold of Rs 50,000 was too low for a precious metal like gold. At today’s gold rate, Rs 50,000 will mean only around 12-15 gms of gold.
GST collections fell to a 19-month low in September this year at Rs 91,916 crore, which was 2.67 per cent lower than the corresponding month a year ago and 6.4 per cent lower than Rs 98,202 crore in August. This prompted the government to constitute a committee of officers to discuss ways for revenue augmentation.
The 12-member panel, which has five members from the Centre and states each, is also looking into issues such as systematic changes in GST to prevent misuse, measures for expansion of tax base, improved compliance monitoring, and anti-evasion measures using better data analytics and administrative coordination.
The government is also working on tax evasion plugging measures, including new return formats, proposed e-invoicing system, and mandatory e-ticketing for movie theatres, among others.
via Govt plans to introduce e-way bill on gold movement to check GST evasion | Business Standard News
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