With apprehensions being raised in social and print media in regards to the requirement of a compulsory money fee of no less than one per cent of the Goods and Services Tax (GST) legal responsibility, the Finance Ministry on Saturday clarified that it’s going to have an effect on lower than half of the whole assesses. On the suggestions of the GST Law Committee, the Finance Ministry has mandated this rule to curb the menace of pretend invoicing and pretend companies/devious fly-by-night operators who avail and go on enter tax credit score (ITC) wrongfully, mentioned a authorities supply. Some apprehensions have been raised in social and print media that the measure of the requirement of the obligatory money fee will adversely have an effect on small companies and can enhance their working capital requirement, mentioned sources within the Revenue Department.
“However, the misconceptions about the measure taken are unfounded and will not affect genuine taxpayers.” Using knowledge analytics, officers talked about that out of the whole GST base of 1.2 crore taxpayers, solely round four lakh individuals have provide worth larger than Rs 50 lakh, and solely round 1.5 lakh out of those four lakh pay lower than 1 per cent tax in money. Now, when the exclusions within the rule are utilized, then round 1.05 lakh taxpayers are additional excluded from this 1.50 lakh. Thus, the rule would apply solely to approx 40,000 to 45,000 taxpayers, they claimed.
Sources additional defined that the money fee of 1 per cent can be calculated on the tax legal responsibility in a month and never turnover of the month. For instance, if the turnover of taxable provides of a taxpayer is Rs 100 in a month and he’s required to pay the GST of 12 per cent on his output taxable provides, then he can be required to pay 1 per cent of Rs 12, that’s, Rs 0.12 (12 paise) solely via money below this rule, an official mentioned. The rule clearly identifies the place the danger to income is excessive and imposes a really affordable price to discourage the fraudsters in a multi-layered fraud of ITC, mentioned the sources.