The first meeting to be chaired by new finance minister Nirmala Sitharaman is scheduled on 21st June. The meeting would is set to take several decisions to curb tax evasion. The Goods and Service Tax Council, the federal indirect tax body is set in charge of the same.
“In the pre-GST era, the common man was used to a much higher tax burden due to the cascading effect of taxes. Now it has come down. Now that the initial period of disruption is over, the benefits of liberal and nominal tax rates will accrue to the economy in the coming years. The fruits of indirect tax reform will be felt in the near future,” said V. Lakshmi Kumaran, managing partner at Lakshmikumaran and Sridharan Attorneys, a law firm. Experts said the benefits of the tax reform would now start becoming visible.
The 35th meeting of the GST Council will seek to introduce observance requirements, primarily on big businesses and eventually on all merchants to ensure tax leakage.
The proposals before the council include the obligatory making-of e-invoicing by large companies, justification of e-way bills (electronic permits issued for the movement of commodities) with the data generated at toll plazas and geotagging of companies.
Ultimately, the plans by the government to increase analysis on businesses amid lower-than-expected GST collections after handholding them through the first two years of the tax reform.
“E-invoicing on the designated portal will be implemented initially on companies with a large turnover, which will be specified. Once the system works, it can be extended to others,” the person cited earlier said on condition of anonymity. However, this is likely to be restricted to business-to-business transactions at first.
One existing safety feature in the GST framework is the repayment for taxes paid on past transactions in the value chain that forces buyers and sellers to keep a stub on each other.
Under the indirect tax system to the next level, geotagging of companies for GST compliance will take significant enforcement activities. At present, the ministry of corporate affairs (MCA) is implementing a geotagging scheme for companies meant at identifying every full-on zip company and the people behind them. Grouping the geo-tagging information available from the MCA database with the data generated by indirect tax authorities will eventually help in verifying the credentials of different parties to a concerned transaction.
