Around 30% of the dealers registered with Tamil Nadu’s Commercial Taxes Department (3.26 lakh) did not pay a single rupee in the Goods and Services Tax (GST) during 2021-22. Besides, about 1.94 lakh dealers had paid less than ₹1,000 throughout the year.
These findings have been made through a recent study done by the Department of the tax remittances. There are about 11 lakh registered dealers in the State, of whom 6.72 lakh come under the State jurisdiction and the rest under the Centre. The threshold for the registration of taxpayers dealing in goods is ₹40 lakh and for those dealing in services ₹20 lakh.
Though the previous financial year’s revenue collections of the GST, in terms of year-on-year growth, saw a positive rate of 15.83%, the highest in a full financial year since the GST was introduced in July 2017, the authorities were plugging the loopholes in the tax collection mechanism. Hence, the study was carried out. The GST revenue collections comprise three components — State GST (SGST), Integrated GST (IGST) settlement and ad-hoc IGST settlement. Compensation has not been taken into account for calculating the GST revenue collections.
Besides, a perusal of the monthly GST collection data, as released by the Centre in the last six months, reveals that Tamil Nadu had registered a tepid growth over the corresponding months in the previous year, whereas Maharashtra and Karnataka, despite having a higher base, had performed better than Tamil Nadu.
After the study, Tamil Nadu Commercial Taxes Department sent communication to 5.2 lakh dealers, “requesting” them to check their accounts.
Asked whether the nil or negligible payment of tax can be considered tax evasion, a senior official of the Commercial Taxes Department said, “Right now, such a conclusion cannot be arrived at. For that, we will have to peruse accounts of the dealers thoroughly.”
After the study, the Department sent communication to 5.2 lakh dealers, “requesting” them to check their accounts. This initiative had its own impact, prompting 22,430 dealers to pay about ₹64.22 crore in May. “For the time being, persuasion is our policy with regard to getting back the tax due to the government,” points out the official.
Observing that not every one of the 5.2 lakh dealers can claim to have carried out business within the threshold, the official says the payment of tax has become a necessity as buyers, especially those belonging to micro, small and medium enterprises, want to avail themselves of input tax credit.
Another measure initiated by the Department is to monitor those who have opted for the composition scheme of taxation with a rate of 1% for traders and manufacturers whose aggregate annual turnover is up to ₹1.5 crore. There are around 60,000 dealers who have joined the scheme. The aim is to ascertain whether such dealers have recorded a turnover in excess of the permissible level. Consequently, 28 dealers have been chosen for inspection of accounts. As a result, over 1, 220 dealers have opted out of the composition scheme and registered themselves as regular dealers. Last month, they paid ₹84 lakh in tax.
Due to various enforcement measures taken by the Department, the number of taxpayers touched an “all time high” of 3.66 lakh during April 2022. In the corresponding month of 2021 (marking the beginning of the second year of the COVID-19 pandemic), the figure was 3.33 lakh, the official notes.