Daily Current Affairs 2021 Govt. defends new rule under GST regime | Daily Current Affairs 2021

Govt. defends new rule under GST regime

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The government has defended its new rule under the Goods and Services Tax (GST) regime, mandating cash payment of at least 1% of tax liabilities for businesses with a turnover of over ₹50 lakh per month, instead of using their input tax credits to discharge their entire tax dues.

The rule, introduced last Wednesday, has attracted criticism from several chartered accountants and tax payers over social media, stoking fears that the mandatory cash payment will adversely affect small businesses, increase their working capital requirement and make GST a more complex indirect tax system.

Department of Revenue sources, however, said that these fears are misplaced and “only risky or suspicious dealers and fly-by-night operators” will be affected by the move aimed at curbing fake GST invoice fraud. Several entities with a turnover of ₹6 crore a year (or ₹50 lakh a month) would be excluded from the ambit of the rule, they pointed out, and the actual number of entities affected may be as little as 45,000 out of GST’s 1.2 crore registered entities.

“If a registered person deposited more than ₹1 lakh rupees as income tax in each of the last two years, or received a refund of more than ₹1 lakh in the preceding financial year on account of export or inverted tax structure, they will be exempted from the rule,” an official said.

Official data analysis suggests that just 4 lakh taxpayers supply a value greater than ₹50 lakh a month, while only around 1.5 lakh of those pay less than 1% tax in cash, the source said. This will further get whittled down to around 40,000 to 45,000 taxpayers after the exemptions are factored in, he explained.

“We have arrived at this rule after detailed deliberations in the GST Council’s Law Committee to identify and control only fraudsters involved in fake invoices and input tax credits. Our nationwide drive against such frauds has led to 175 arrests and more than 1,800 cases being booked against 8,000 fake entities since the second week of November,” the official said.

Source: The Hindu

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