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To reap the full benefits of GST, the RBI has recommended to introduce an invoice matching system, ways to mitigate system design deficiencies and the simplification of GST processes.
The Reserve Bank of India has attributed lower GST collections in the past few months to slow GDP growth. To reap the full benefits of GST, the RBI has also recommended to introduce an invoice matching system, ways to mitigate system design deficiencies and the simplification of GST processes. Further, the RBI has suggested that the GST architecture requires significant administrative reforms and ways to deal with IT-related glitches. While direct taxes grew by 13.5 per cent in the previous financial year, the indirect taxes grew by a meagre 2.9 per cent. The government has budgeted the growth of indirect taxes at 19.4 per cent in the current financial year.
The GST collections have been budgeted at Rs 6.6 lakh crore, lower than Rs 7.6 lakh crore announced in the Interim Budget on February 01, 2019. With the downward revision in GST collections relative to the Interim Budget, budgeted buoyancy of GST now looks more realistic, said the RBI report.
Meanwhile, the government has announced to clear all pending GST refunds due to MSMEs within 30 days. The government has also assured that in future, all GST refunds shall be paid within 60 days from the date of application. However, even two years after the implementation of the GST, the Narendra Modi led government is struggling with frauds in the new tax regime.
The government has recently launched a major enforcement drive against the tax evaders and in an unprecedented operation, a joint team of the directorate of revenue intelligence and directorate general of GST intelligence raided more than 300 locations across the country. The operation was so massive that it involved more than a thousand tax officers of CBIC. The investigation revealed that input tax credit of more than Rs 470 crore was availed on the basis of fake or bogus invoices, where the invoice value of those transactions was around Rs 3,500 crore.