Working to boost compliance, 90% assessees filing returns: CBIC chairman Vivek Johri

(This story originally appeared in on Feb 08, 2022)

With the help of new measures on GST and customs, the government is hoping for healthy indirect tax collections in the next fiscal. Central Board of Indirect Taxes and Customs (CBIC) chairman Vivek Johri discusses the strategy with TOI. Excerpts:

What is the target to achieve the GST growth aim of over 15% during next financial year?
We have been working on improving compliance, alongside other strategies for revenue augmentation. We started dealing with fake dealers and invoices in the middle of 2020. Administrative and legal changes have borne good results as is evident from the number and percentage of results being filed. Now, nearly 90% of the assessees are filing returns. We can work out the system of scrutiny and we are going to shore up our audit strategy. This will help improve revenue productivity of returns as we will be able to check what is being filed.

There is a proposal in Budget to restrict the maximum output tax. . .

We had conducted a study and we looked at some of the new registrants coming in it. Many of them did not have income taxpayers or were not excise or VAT dealers and they were paying their entire tax in credit and disappearing after a few months. We have taken the ability to specify that at least 1% of tax has to be paid in cash. The other amendment is to deal with new entrants in the system and initially, we will allow them to use only a certain part of the credit. It is not as if we are going to block it forever.

What is the kind of reform needed on GST to help generate more revenue and how to simplify things to deal with classification and other issues?

Rate rationalisation is a maJor issue, for which a group of ministers (GoM) is also working. If we are able to reduce number of rates and exemptions, many of the disputes will go away. There is also a realisation that the position on compensation cess is fairly clear and there is a concern since it goes away from June. There is also a GoM looking at technology issues, which may deal with some of the facilitation issues.

Is monthly GST collection of Rs 1. 35-1. 4 lakh crore the new normal?

Rs 1. 30-1. 35 lakh crore is doable. As the economy recovers, some of the services will come back.

How are you approaching your customs duty collection target?

We have much greater clarity about how much we are foregoing on export promotion schemes. Streamlining of exemptions, with 350 to be phased out, will help in measuring the revenue foregone, which will help transparency. The third thing that will help is import duty at concessional rates because end-use exemptions will go through this, which will again help us see who are the beneficiaries and to what extent they are utilising them. Fourth, there is an enabling provision on valuation, where we notice especially for consumer goods, such as, toys, furniture, ladies handbags, sportwear, footwear, readymade garments, where imports are happening at very low values. Most of the times, since we go with the transaction value, we are unable to tackle it effectively. Now, after wide-ranging consultation with the industry and collecting data, we will identify certain items, that will be subject to additional controls from the point of view of valuation. Say, furniture, is an item and after consultation put it under surveillance. Based on consultation, we may prescribe an expected declared value based on the composition, design, etc. If a transaction happens below that price, there will be additional responsibility on the importer to give us additional documents and establish the veracity of the value. Other customs administrations have also adopted this.

Are there other items and how many will be there?
Most will be consumer goods such as food products, ranging from chocolates to confectionary, fresh agriculture produce, such as apple, dry fruits.

Is gold smuggling linked to customs duty?

We analysed the data for last 10-15 years, we do not find a correlation between the two.

When you come from Gulf countries, the green channel is dead and every bag is scanned. How do you address it since it’s bad optics and everyone is deemed to be a suspect? There could be times when we do 100% checking of a flight. We have a passenger profiling system, which looks at a lot of data such as travel history, business, whether he has been caught in the past. While we are able to scan unaccompanied baggage, accompanied baggage can only be scanned after he comes out of duty-free. It’s not our intention to scan everyone. We are moving towards sharper targeting.