As the finance minister rises to present the Union Budget for 2021-22, the buoyancy in indirect tax collections in the last four months would give her a lot of leeway amidst the gloom of the pandemic and the shortfall in other targets set last year. GST collections and filings for December have broken all records with over Rs 1.20 lakh crore collected and over 90 lakh returns filed in the month.
While experts have pointed out that a part of it is due to the fact that more annual returns were filed and businesses squared up their yearly taxes, there can now be no denying the fact that the economy is reviving well and the government's efforts in simplifying GST processes, combined with big data analysis to prevent fraud and avoidance, has resulted in better compliance which has in turn improved collection.
Anything above Rs 1 lakh crore ensures that the Centre pays the dues of the states on time and development work is not delayed. But since the average collection of the last four months have been over Rs 1.10 lakh crore, the Centre has been in the position to clear back dues also. This is a very happy situation and confirms the faith the Centre showed in the solidity of the Indian economy. Since other economic indicators are also showing positivity, experts predict that the GST collections will be soaring for the next few months.
This also means that the much-criticized GST regime is now stabilizing. The government must watch the situation closely and bring petroleum products and liquor under the regime now to make it truly one India one tax regime. It has been analyzing the data from GST returns, IT returns and Customs and must redouble efforts to prevent fraud and leakage and improve collections further. Later, the GST Council must think about having just three slabs and no exemptions so that everyone has to file returns and cross verification of data is possible in each and every case.
