Monthly GST collections are becoming a sort of a barometer to measure the state of the economy. If that is used as a basis, data for October 2024 would hint that all is well with the Indian economy.
Thanks to pick-up in domestic sales and improved compliance, gross GST collection in October rose 9 per cent to over ₹1.87 lakh crore, the second-highest after the ₹2.10 lakh crore in April 2024.
The Central GST collection stood at ₹33,821 crore, State GST at ₹41,864 crore, Integrated IGST at ₹99,111 crore and cess at ₹12,550 crore during the month.
GST revenue data do not highlight how much of the revenue is due to non-economic factors such as better compliance and aggressive assessments — both of which are undoubtedly contributing to the uptick in revenues.
In general, taxpayers have complied with GST laws. E-invoicing has reduced the menace of fake invoicing to avail non-existent input tax credit. However, GST assessments continue to be overly aggressive with a focus only on revenue collection.
GST Tribunals are not being established at the required pace to handle the enormous number of appeals that are certain to pile up. The Central Board of Indirect Taxes and Customs (CBIC) should step in to ensure that assessments are smooth and only deserving cases end up at the Tribunals. It can do this by issuing circulars that are clear and can be easily understood by everyone, unlike some of the present circulars.
For instance, Section 128A and Rule 164 were inserted in the GST law through different notifications to provide for waiver of interest or penalty or both for a few financial years provided the tax is paid before March 31, 2025.
Despite this, a lot of questions remained unanswered forcing the CBIC) to come out with Circular No 238/32/2024-GST, which, at over 15 pages, clarified issues relating to the filing of the application, payment of tax and processing of application and issuance of orders.
As is where is basis
Over the last year or so, the GST Council seems to have taken a liking for the phrase ‘as is where is basis’ to complete past assessments relating to changes in the rate of tax made by the Council. With no guidance to define the term, taxpayers have been worried as to how aggressive assessment officers would interpret the phrase. Circular No 236/30/2024 attempts to provide some guidance on this topic.
In the context of GST, the phrase ‘regularised on as is where is’ basis means that the payment made at lower rate or exemption claimed by the taxpayer shall be accepted and no refund shall be made if tax has been paid at the higher rate.
The intention of the GST Council is stated to be to regularise payment at a lower rate including nil rate due to the tax position taken by the taxable person, as full discharge of tax liability.
One is not sure whether the circular clarifies many of the questions taxpayers had on ‘as is where is basis’ assessments.
Apart from a few inconsistencies, GST rates appear to be at reasonable levels. Taxpayers have got used to the frequent changes in the laws and the portal. Areas of concern that remain are unclear circulars and lack of detailed instructions on how to complete assessments. If these are fixed, there is no reason why monthly GST revenues should not cross ₹2 lakh crore regularly.
The writer is a chartered accountant