Questions that GSTN left unanswered, and Gita could not answer

Courtesy Covid-19, there were no major celebrations or announcement by the government on the completion of three years of GST. Instead, the GST Network issued a 40-page statistical report on an assortment of areas under GST. Being only a statistical report and not a ‘notification’ issued under GST laws, it can be read and understood without shedding any sweat.

Statistical Report

The report states that the total number of active taxpayers as of June 2020 was 1.23 crore -- an increase since April 2018 of around 14%. April 2018 was the first month when GST revenues crossed the magical Rs 1 lakh crore mark -- a figure that had held more or less before the pandemic struck. Somebody in GSTN should enquire as to why despite that 14% rise in the number of active taxpayers, GST revenues remained flat.

It is also clear that the concept of ‘casual taxable person’ has not found favour with the taxpayers -- total registrations from across the country were only 45. Interestingly, there were also a grand total of three non-resident taxpayers. Maharashtra, Uttar Pradesh, Gujarat, Tamil Nadu and Karnataka lead the list of active taxpayers. To add a bit of fizz to the data, GSTN should compare this with the list of active taxpayers in the pre-GST regime. It could be argued that the data is not comparable since the threshold limits were different in the two regimes. Yet, we should remember that these are statistics -- any number can be interpreted in any manner. As the author Ron Delegge II put it, 99% of all statistics only tell 49% of the story.

Data, data

The CBIC should be pleased that the graph of the total number of returns filed looks like the path to climbing a mountain – rising, with some troughs. If not for the setback of the last few months, the cumulative number of returns could well have touched 50 crore. Not all registered taxpayers have filed their monthly GSTR 3B returns -- on average, around 75-80% do so on time. The statistics on the contribution from different types of businesses reveals a startling fact -- 80.18% of taxpayers are proprietors and not listed or limited companies. Partnership firms contribute around 10.78% of the taxpayer population. However, maximum GST revenues come from public limited companies (35.29%), private limited companies (27.51%) and proprietors (13.35%). The above statistic should be a cause of grave concern to CBIC -- the pandemic is going to impact the proprietors/partnership firms the most and this will add to the woes of the government on GST revenues since it will get lesser revenue from 90% of the taxpayer population who contribute around 24% to total GST revenues.

If there is any area where GST has delivered, after the usual hiccup, it is in the system of e-way bills. On February 29, a record 25.19 lakh e-way bills were generated. More than 70 crore e-way bills have been generated till now. It is also interesting to note that more than 99% of transport happens by road and not by air or ship. Only 27.58% of the total active taxpayers have registered on the e-way bill portal -- this could be an indicator that the services sector is dominating GST revenues.

Missing in the report

GSTN could have won laurels if they had reported as a statistic the total compensation that was payable to the state governments and what was actually paid. Putting this number down on a piece of paper may also enable the government to think of ways of funding the gap. On refunds, they could have reported the improvement in the turnaround time to issue the refund orders (there has actually been an improvement).

At one point in time, the reason for a small drop in revenues could be attributed to many normal taxpayers opting for the composition scheme -- these details could also have been given in the statistical report. Ever since the system of check-posts were removed (they have been replaced by mobile squads who are strategically placed near toll gates where all approaching vehicles slow down), quite a few vehicles have been intercepted and questions asked on the transport documents, including the e-way bill. This could have also been a statistic – the total number of vehicles intercepted and total tax and penalty collected.

Another piece of useful information would have been the total contribution to GST revenues from the manufacturing and services sectors. Also, which were the most frequently used HSN codes and which the least? Any information can be turned into a statistic. GSTN could keep these points in mind for the next edition.

The statistical report also included non-statistical information in the form of outreach initiatives by the CBIC – training and other programmes conducted and the like. To prove that they are technologically advanced, they announced the launch of GST Interactive Technical Assistant (which can be smartly condensed to GITA), a chatbot. The chatbot works on Artificial Intelligence and is loaded with pre-drafted responses to taxpayers’ queries on common topics, such as payment, e-way bill, registration, refunds and returns, etc.

Chatbots, in general, suffer from the drawback of not being able to answer too many questions. Gita suffers from even more drawbacks because the GST law that we have today raises more questions than answers. Probably the only advantage that Gita has over any GST consultant is that ‘she’ will not tire and give in to the eccentricities of the law so easily as many consultants and taxpayers do.

Gita answers only what she has been programmed to answer. So, she cannot answer questions such as “When will GSTAT be established?” or “Do you feel GST law has been successful in India?” Maybe, like Alexa, Gita would say, “Sorry, I don’t know that one” to such questions. This could be yet another statistic -- how many questions could Gita not answer so far?

(The writer is a Bengaluru-based tax expert)