The panel has officials from Maharashtra, Tamil Nadu, Uttar Pradesh, West Bengal, Punjab, apart from officials from the Centre and GST Network (GSTN).
The Goods and Services Tax (GST) Council has constituted a 12-member committee of officials from states and Centre to suggest steps to augment revenue and improve compliance under the indirect tax regime. The move to look at measures to boost GST revenue come as gross monthly revenue collections fell to a 19-month low and contracted 2.7 per cent year-on-year to Rs 91,916 crore in September.
GST collections are expected to be hit further as the recent rate cuts announced by the GST Council on September 20 will come into effect from October 1, leaving no room for further rate cuts. Though September marked only the second instance of a contraction since the July 2017 rollout of the indirect tax regime, GST collections have been slowing due to weak consumption demand, with revenue topping Rs 1 lakh crore-mark in only three out of six months of this fiscal. Officials said gross GST collections are in line with the targets so far, but the recent instance of contraction in September revenue has raised concerns about the future trend and sustainability of revenues, especially because any further dip will put strain on the Centre which has to mandatorily provide compensation to states till 2022.
The committee for GST revenues, which will have to submit its first report within 15 days, will also look into wider range of reforms such as systemic changes in GST including checks and balances to prevent misuse, measures to improve voluntary compliance, improved compliance monitoring and anti-evasion measures using better data analytics and better administrative coordination. The committee will also look into policy measures and relevant changes needed in the law and measures for expansion of tax base under the GST regime.
The panel has officials from Maharashtra, Tamil Nadu, Uttar Pradesh, West Bengal, Punjab, apart from officials from the Centre and GST Network (GSTN). Any other state willing to join the panel can volunteer by writing to the GST Council Secretariat.
Slowing revenues are being seen as a risk not only for the Centre’s revenues but also for states, which receive 42 per cent of shareable central taxes as central tax devolution.
Revenue concerns weighed strong during the GST Council meeting held last month. The 15th Finance Commission made a presentation to the Council, in which it suggested lowering of the legally guaranteed 14 per cent annual growth rate for states in the remaining compensation period of three years till 2022. The Commission cited that the rates were fixed keeping in mind the pre-GST rates, which have been lowered significantly. States opposed this strongly by saying that stability in GST rate and structure should be the prime objective of the Council instead of frequent tinkering.
The states also expressed concerns regarding the anticipated lower share in devolution of Union taxes, which would also arise on account of the recent announcement of the central government to cut the corporate tax rate. The government announced a cut in corporate tax rate for domestic companies to 22 per cent and for new domestic manufacturing companies to 15 per cent, a move estimated to cost the exchequer Rs 1.45 lakh crore annually.
Source- Indian Express.