GST: Lack of item-wise tax collection data proves a hurdle

  • 23-May-2018
  • GST: Lack of item-wise tax collection data proves a hurdle

Even after 10 months of the Goods and Services Tax (GST) rollout, tax authorities are not in a position to tell which sector or item generates higher revenue and which one lags. The reason for this is the Tax Department has no item or sector-wise tax collection details under the biggest tax reform.

Meanwhile, officials under the Central Board of Indirect Taxes and Custom (CBIC, previously known as Central Board of Excise and Custom or CBEC) have started preliminary work on developing software to record item-wise details under GST.

“Take the example of services, prior to July 1, 2017 we used to have over 250 heads for recording revenue collection and we used to find which sector is performing well and which is not. As of now we do not have such excel sheet under GST,” a senior Government official told BusinessLine adding that it is really hard to say that tax deposited is from goods or services. GST was introduced on July 1 last year and had subsumed 17 taxes and 23 cesses of both Central and States.

According to the official quoted above, lack of item-wise data has its own disadvantage “Earlier, tax details were really helpful for the Government to plan incentive or give a boost to a particular sector. Now for the time being, it is difficult,” the official mentioned.

Different codes

Under the GST regime, every goods or goods category and service or service category has been given a code. For goods, there is HSN or Harmonised System of Nomenclature code, while for services there is SAC or Services Accounting Code. Both these are internationally accepted code and used in the international trade. Trade and industry are required to use two to eight-digit code based on their turnover or nature of the business. Taxpayers whose turnover is above ?1.5 crore but below ?5 crore shall use the two-digit code and the taxpayers whose turnover is ?5 crore and above shall use the four-digit code. Taxpayers whose turnover is below ?1.5 crore are not required to mention the code in their invoices. For export and import business, the code will have 8 digits.

Return filing

Officials say that reason for not getting item-wise detail lies in the present system of return filing. Explaining this, Saloni Roy, Senior Director with Deloitte India, says that the current return filing system (where GSTR -1 and GSTR -3B are to be filed) provides tax collection information on a consolidated basis. “The current return filing system is unable to throw up tax collections on an item wise/HSN wise basis due to the return formats of GSTR 1 and 3B,” she said.

Echoing the same sentiment, Bipin Sapra, Tax Partner with EY India, feels that the tax authorities are unable to process the HSN wise details of revenue collection as today the revenue collection is based on GSTR3B return. GSTR3B return does not include the filing of HSN-wise details of revenue and hence the details are not readily available for collation. The GSTR1 has the details but the same may not match with the figures of GSTR3B, given that HSN is not a mandatory field and there is no validation of the correctness of this data. “Once GSTN comes out with a detailed analysis of GSTR1 data, HSN-wise details may be available. However, GSTR1 does not have the data of actual tax payment through cash and credit for the HSN-wise GST liability of a company,” he said.

Meanwhile, Roy expects that it is possible when the new monthly return is introduced, the Government may be able to gather and monitor item-wise tax collections. However, this will be dependent on the format of the new return. The new monthly return format is expected to be in place by the year-end.

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