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FinMin crafting strategy to boost GST revenues

Monday, September 10, 2018

Alarmed by a nearly four-fold rise in GST compensation to states for June-July, the Finance Ministry is crafting a strategy to shore up tax revenues and engaging with states to identify issues hindering their collections.

Finance Secretary Hasmukh Adhia has started meeting with GST officers, both from central and state tax departments, in the state capitals to understand issues plaguing the GST collections.

There has been a spike in the bi-monthly GST compensation paid to the states by the Centre. The Centre paid Rs 14,930 crore to compensate states for revenue loss incurred in June and July, a nearly four-fold jump compared to Rs 3,899 crore paid for the months of April and May.

"A strategy is to be devised to shore up GST revenues. The amount of compensation to be paid to each state varies every month and there is no set pattern," an official told PTI.

The reason for increased compensation also varied from state to state. For instance, in one of the cases, a state saw a huge outgo on account of VAT refund following a court verdict, the official added.

A discussion to shore up revenues has already happened with four states-- Punjab, Himachal Pradesh, Puducherry and Jammu & Kashmir, while a dialogue with Bihar and Uttarakhand is slated to take place later this month.

The official said that one of the options being considered is stepping up anti-evasion measures with a focus on top 30 taxpayers, but added that the Centre will ensure that the fix to the problem will not be intrusive on businesses.

"Data analytics will be put to use to examine the profile of top 30 taxpayers to study their tax payment pre and post GST implementation," the official added.

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