The trend is only expected to amplify further in the months ahead, experts say.
Analytics, AI and stricter norms behind record GST collections
Greater use of new technologies and stricter norms on input tax credit by taxmen is not only helping ensure increased compliance but has also resulted in a steady increase in Goods and Services Tax (GST) collections on a month-on-month (MoM) basis.
With the recent directions by the Central Board of Indirect Taxes and Customs (CBIC) on scrutiny of returns and the reduction in e-invoicing threshold to Rs 20 crore, the collections are only expected to improve further in the months ahead, experts have predicted.
Gross GST collection for April 2022 reached an all-time high of Rs 1.68 lakh crore, thus, surpassing the March collection of Rs 1.43 lakh crore by over 25,000 crores, indicating a strong recovery in economic activity despite the economic headwinds resulting from the Russian military action in Ukraine.
“The record collection is in the backdrop of the commendable usage of technology in compliances by the government. Also, the usage of analytics has helped too. It is interesting to note that the growth is across most states,” said Mahesh Jaising, partner, Deloitte India. “The steady growth over the recent collection of Rs 135,000 crore average a month, reflects a stabilisation of the GST collection and growth as well,” he added.
The sharp growth in the GST collections is based on all major states reporting increases ranging from 9 per cent to 25 per cent, GST returns filing coming at 1.06 crore and e-way bill generation at 7.7 crores.
“While the GST collections in respect of March have always been high, the record collection reported is on account of multiple favorable factors, including the recent changes on permitting input tax credits only upon timely compliance by the vendors,” said MS Mani, partner, Deloitte India.
“The impact of the continuing focus on ensuring timely compliance by all GST registrants by restricting the input tax credits of the buyers together with enhanced analytics to detect evasion has also contributed significantly to the all-time high collections,” added Mani.
The tax authorities prodded taxpayers to file returns timely to making compliance easier and smoother. Strict enforcement action was taken against errant taxpayers identified based on data analytics and artificial intelligence (AI).
Steep incline outcome of demonetisation, GST
Experts said the robust GST numbers were part of the buoyant increase in tax collections overall. And this was not a sudden development but the sum of several initiatives taken in the last couple of years. For instance, the impact of initiatives such as demonetisation in 2016 and GST in the following year.
“Now, both these big initiatives have forced a lot of individuals and companies to register for income tax as well. Like, if you are paying GST, you also need an income tax registration. So, steps like GST have also had a cascading impact on income tax collections. Similarly, post-demonetisation, the number of income tax returns filed increased suddenly. So, all these measures are resulting in improved compliance,” observed Neeru Ahuja, partner, Deloitte India.
While welcoming the improvements brought about by these steps, experts also recommended the need to balance such revenue augmentation measures with ease of doing business for taxpayers. In the recent past, several companies have been dealing with multiple audits and assessments across states. Introduction of some standard operating procedures (SOPs) to address these issues will ensure that genuine taxpayers were not burdened unnecessarily.