Systems reforms to boost revenue, address states’ concerns: Vivek Johri, chairman, CBIC

With the five-year goods and services tax (GST) compensation for states coming to an end on Thursday, measures to improve compliance such as tightening of input tax credit (ITC) norms, system reforms, data analytics, correction of inversion and pruning of exemptions will boost revenue productivity of state GST, Central Board of Indirect Taxes and Customs (CBIC) chairman Vivek Johri said. Steps to check evasion such as biometric authentication of high-risk taxpayers will help the authorities plug leakages, Johri said in an interview with Prasanta Sahu. Excerpts:

Are you tying up with more agencies for data exchanges to boost compliance?
We are already triangulating data between GST, customs and income tax. There is a wealth of data, which we are trying to use in the best possible manner for risk profiling. GST department is already exchanging data with the ministry of corporate affairs, so that it can be ascertained at the time of new registrations, if the applicant is already captured in MCA database. We are also exchanging data with UIDAI.

How will these measures help curb black money?
All these will improve revenue productivity. We don’t want people to issue fake invoices. Toxic credit is going around in the system, which eventually compromises tax revenues. Machine learning, physical verification and geo-tagging of new registrants will help us assess the taxpayer who is entering the system and ensure he/she is not just for issuing fake invoices.

How do you think the system evolving in the coming years?
I think it is going in the right direction. Most of the recommendations on the rate rationalisation such as removal of exemptions and correction of inverted duty structures will bring in transparency by removing opaqueness. Many measures have been taken to give relief to taxpayers from compliance provisions. We want to improve revenue productivity of SGST and we want to improve it through compliance as much as possible. So, all these elements were part of the decisions that were taken on Wednesday (in the GST Council meeting in Chandigarh).

Do you think system reforms will substantially reduce tax evasion?
It should. We have a multi-pronged strategy to curb tax evasion. Now, a taxpayer will not be able to file GSTR-1 (a monthly return that has to be filed by every registered GST taxpayer) without filing the GSTR3-B (a self-declared summary GST return filed every month) for the previous month. Earlier the gap between the two was six months. We had to wait for six months for people not filing returns before cancelling or suspending their registrations. Now, the timeline is shortened to only one month, which means it is almost real time with credit taken and neutralised on the same date. It takes away the incentive to go for fake billing, which used to thrive due a long gap between the two forms.

Won’t the 12% tax on hotel room below Rs 1,000 hit common people?
Such exemptions will distort the system. But, service provider will also get credit for inputs, which it can pass on to consumers.