<p>The government may be losing Rs 5 lakh crore in indirect tax revenue a year because of defaults and evasion, according to a report by <em>Mint </em>quoting the Fifteenth Finance Commission (FFC). </p>.<p>This amounts to 40% of the goods and services tax (GST) collection target this year, assuming an average of Rs 1 lakh crore a month GST revenue was collected in the first nine months of this fiscal.</p>.<p>As per the assessment by FFC, the revenue loss was equivalent to 2.4% of gross domestic product (GDP), which works out to Rs 5 lakh crore if one goes by the first advance estimate of nominal GDP for FY20 released earlier this month. </p>.<p>Until December 31, central and state governments collected more than Rs 9 lakh crore in GST and hope to collect another Rs 3.55 lakh crore by March-end.</p>.<p>The estimates confirmed policymakers’ fears that businesses are not paying their fair share of taxes. The FCC pointed out that there is a gap of about 5.4% in India’s overall tax-to-GDP ratio. The GST compliance gap alone accounts for about 2.4% of GDP. </p>.<p>According to the report, factors that led to the widening of the GST revenue include slowdown in the economy and consumption, raising the threshold for GST registration to Rs 40 lakh in sales from the original Rs 20 lakh, a series of tax rate cuts, raising the threshold for small businesses to register for a concessional tax scheme from Rs 1 crore to Rs 1.5 crore and instances of tax evasion.</p>.<p>Amid a shortfall in central and state governments' revenue, the Central Board of Indirect Taxes and Customs has started a crackdown against the misuse of tax credits and GST evasion. GST authorities have listed about 40,000 companies for claiming excess or wrongful tax rebates. </p>
<p>The government may be losing Rs 5 lakh crore in indirect tax revenue a year because of defaults and evasion, according to a report by <em>Mint </em>quoting the Fifteenth Finance Commission (FFC). </p>.<p>This amounts to 40% of the goods and services tax (GST) collection target this year, assuming an average of Rs 1 lakh crore a month GST revenue was collected in the first nine months of this fiscal.</p>.<p>As per the assessment by FFC, the revenue loss was equivalent to 2.4% of gross domestic product (GDP), which works out to Rs 5 lakh crore if one goes by the first advance estimate of nominal GDP for FY20 released earlier this month. </p>.<p>Until December 31, central and state governments collected more than Rs 9 lakh crore in GST and hope to collect another Rs 3.55 lakh crore by March-end.</p>.<p>The estimates confirmed policymakers’ fears that businesses are not paying their fair share of taxes. The FCC pointed out that there is a gap of about 5.4% in India’s overall tax-to-GDP ratio. The GST compliance gap alone accounts for about 2.4% of GDP. </p>.<p>According to the report, factors that led to the widening of the GST revenue include slowdown in the economy and consumption, raising the threshold for GST registration to Rs 40 lakh in sales from the original Rs 20 lakh, a series of tax rate cuts, raising the threshold for small businesses to register for a concessional tax scheme from Rs 1 crore to Rs 1.5 crore and instances of tax evasion.</p>.<p>Amid a shortfall in central and state governments' revenue, the Central Board of Indirect Taxes and Customs has started a crackdown against the misuse of tax credits and GST evasion. GST authorities have listed about 40,000 companies for claiming excess or wrongful tax rebates. </p>
