The Confederation of All India Traders (CAIT) in a communiqué sent to Finance Minister, Piyush Goyal on Tuesday has expressed concern over shortfall in collection of GST revenue and has suggested structural changes to levy GST only at three points from the origin of goods till it reaches to the consumers.
CAIT National President, B C Bhartia and Secretary General, Praveen Khandelwal said there is a general tendency among consumers not to pay tax due to higher rates. Hence they avoid taking bills while purchasing goods, which leads to a sizeable number of transactions across the country, remain informal. This causes loss of both direct and indirect tax revenue to the government for which the trading community is blamed for evading taxes, which is not true. Consumers not opting for bills to avoid taxes is the major reason for shortfall in the revenue.
Both Bhartia and Khandelwal have suggested to levy GST only at three points in the entire supply chain. First, levy of SGST and CGST on first sale of a commodity in a State. Secondly, IGST on inter-state transactions and thirdly SGST and CGST on goods produced or manufactured in a State at the annual turnover of more than Rs 50 lakhs.
After the first transaction in a State, the rest of the supply chain should be relieved from GST and the GST component should be merged in the price of the commodity so, when it reaches to the end consumer, the commodity becomes tax paid. Since the goods will be purchased in a State only after paying GST, there will be no question of tax evasion.
Roughly, the supply chain registered under GST comprises 1 lakh manufacturers, 5 lakh big traders, 10 lakh distributors and over 1 crore retailers. However, the major chunk of revenue is derived from manufacturers, big traders and distributors while more than 1 crore retailers add minimal value addition to the supply chain. Hence their contribution in revenue is minimal. If the above suggestions are implemented, the government will need to monitor and regulate only about 25 lakh assesses and the target of revenue will be easily achieved.
On the other hand, the consumers knowing the fact that the goods are already tax paid and they need not to pay additional money, will obviously demand bills while purchasing goods. In this case the informal sale will be converted into formal sale which will certainly increase the revenue and more and more transactions will come under formal economy, said both Bhartia and Khandelwal.