The government suspects that its composition scheme meant to ease life for small businesses is being misused with the average quarterly turnover estimated at Rs 2 lakh. For July-September, around 10 lakh entities had opted for the composition scheme for GST — where only the turnover details have to be disclosed and tax is paid at a flat rate. Of these, around 6 lakh filed returns till December 25.
But the total amount mopped up from these entities for the three-month period added up to Rs 251 crore, translating into an annual turnover of Rs 8 lakh.
The number has taken the government machinery by surprise as the threshold for registering for GST is an annual turnover of Rs 20 lakh. With registrations on the rise, now around 15 lakh entities are registered for the composition scheme. But officials fear that because of multiple relaxations, there has been leakage of tax revenue from the system.
The startling numbers have also prompted the finance ministry brass to check the scheme for payment of presumptive tax under income tax, where the limit was doubled to an annual income of Rs 2 crore. The numbers estimate the average annual income at Rs 18 lakh, which again officials believe is a result of under-reporting by those who are eligible to opt for it.
The immediate worry, however, is GST, where aspects like invoice matching, reverse charge and e-way bills were put on the back burner as there was an uproar of sorts against the new regime that sought to plug leakage of government revenue. While the government will roll out eway bills next month and make it mandatory from February to track consignments moving in trucks, the GST Council will decide on the reintroduction of the two other tools when it meets on January 18.
Source: Times of India