Doing away with exemptions, correcting IDS steering GST system in the right direction, says CBIC Chairman Johri

Shishir Sinha | Updated on: Jun 30, 2022
Vivek Johri, Chairman, Central Board of Indirect Taxes & Customs

Vivek Johri, Chairman, Central Board of Indirect Taxes & Customs | Photo Credit: KAMAL NARANG

Goods & Services Tax (GST) system has completed five years. With 17 types of taxes and 13 types of cess integrated into one, the indirect system now embarks into new years with intention to make higher collection with less impact on consumers, make life easier for honest tax payers and wider use of technology to curb evasion. In an interaction on the sidelines of the GST Council meeting held here, Chairman of the Central Board of Indirect Taxes and Custom (CBIC), Vivek Johri, spoke about agenda for the road ahead. Excerpts:

The GST Council has approved recommendations by a Group of Ministers (GoM) to minimise risk to the exchequer by profiling taxpayers from the beginning of registration process to his/her behaviour post registration. How will the system work?

The GoM on IT has recommended two or three things. One is, they suggested AI and machine learning for profiling of new taxpayers. Second, they suggested injection of electricity meters, the bill data in our system so that we can ensure that any new person asking for registration physically exists at that location. And the third suggestion is about geotagging of location. I am confident that all the three will help us assess whether a taxpayer entering into the system is actually a physical entity and not just there to raise fake invoices, sitting at home.

There are suggestions about integrating data with the National Payment Corporation. Are you also looking at integrating more departments/government entities to access more data?

We are already triangulating GST data with Custom and Income Tax. That itself is a wealth of data. We are trying to use it in the best possible manner for risk profiling. Data integration with the Corporate Affairs Ministry also happening as GSTN is already exchanging data with the ministry, particularly in case of new registrations as they have data on companies, so we are able to check with them whether the person who is taking registration is already on their data base. Likewise, we are also exchanging data with UIDAI for Aadhaar authentication.

Is it like an attack on black money generation?

Yes, and also better revenue productivity from GST itself. We do not want people to just issue fake invoices and toxic credit going round in the system.

The Council has approved a proposal to do away with exemptions on services provided by all regulatory bodies. What will be the rates?

Rates will depend on what kind of services they provide. Normally, rate for services, similar to those provided by regulators is 18 per cent.

Since exemption on hospital room rent over ₹5,000 has been done away with besides exempting most of their services, does this mean they will not get ITC?

Most services provided in hospitals are exempted from GST, and now GST will be imposed only on room rent. So, it is possible they may not get ITC.

What is the direction GST is taking now?

We are going into the right direction. Most of the recommendations on rate rationalisation such as those on doing away with exemption and correcting inverted duty structure (IDS, higher tax on inputs and lower tax on finished products) intends to remove distortions. Exemptions and IDS make the system opaque, consumers do not know how much tax they are actually paying because what they pay is not the normal rate of tax. Implementation of these recommendations will make the system more transparent, improving its revenue productivity.

There are many decisions which provide relief to taxpayers in terms of compliance also. This is the direction in which we are finally headed. We want to improve the revenue productivity of GST. We want to improve and do it through compliance as far as possible without being intrusive.

Earlier you had said the Centre and States together detected over ₹50,000 crore fake input tax credit in the last 18-19 months. Do you see the number coming down after the introduction of new system?

It should because we have done a multi-pronged attack on this. Let me give you a simple example. By mandating that you will not be able to file GSTR 1, if you have not filed GSTR3B in the previous month, you are taking away the incentive to go for fake billing. Earlier, the gap was six months and now it is almost real time. Now with the reduction, issuance of fake invoices and utilisation of input tax credit fraudulently should come down significantly.

Published on June 30, 2022
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