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Sunday, April 11, 2021

India’s GST compliance is rising: Silver lining for economy amid pandemic?

India’s GST compliance is rising half of the usual level. It is certainly a gleam of hope amid this pathogen nightmare. Of course gradually, but this means that business activities have started looking up following lockdown relaxations.

The GST compliance rating is a score that the Centre gives to a business, making other businesses understand how compliant are they with the tax department.

India’s GST compliance & e-way bill connection

Each business establishment gets their GST compliance rating as per their monthly and annual filing of returns, providing amount of taxes paid and input credit used among other other such details. E-way bill, generated for  movement of goods worth Rs 50,000 or above from one place to another, is a  parameter to calculate GST compliance rate. All GST-registered trades need e-way bills for movement of cargo if its beyond the Rs 50,000 limit. All information about each consignment’s transport are recorded in such bills via GSTN, a government portal.

Now the silver lining here is around 9.4 lakh of such bills were generated on the Good and Services Tax Network portal in May third week compared to 8.2 lakh and 6 lakh respectively in the two preceding weeks.

“Generation of e-way bills is a reflection of movement of goods i.e. economic activity across India. Since April was a complete lockdown, the e-way bills generated had fallen to a record low. The uptick of e-way bills generated in May clearly shows green shoots of goods movement and economic activity.” – tax expert Abhishek Jain. source: Financial Express

We all know how severely the Covid-19 pandemic has crippled India’s economy. Economists are unanimous about India’s growth to fall off the cliff and contract 5 per cent in the 2021 fiscal. Amid these hard times, traders are pinning hopes on to this slight rise in India’s GST compliance.

Figures of March and April amid nationwide lockdown

May last year saw 17.4 lakh of e-way bills generated on the GSTN portal and the number rose in the subsequent months. Experts hope the numbers will rise as more and more economic activities resume from next month. The per day generation of e-way bills plunged to less than 3 lakh in April that saw strict observance of nationwide lockdown. Several traders, caught unaware amid lockdown, requested finance minister Nirmala Sitharaman to extend validity of their e-way bills.

The numbers started to fall soon after markets became volatile following rapid spurt of Covid-19 cases from March. March, which is usually the busiest month of a year, saw only 13.1 lakh/per day e-way bill generation. The figure was 19.7 lakh per day in February.

Fingers crossed for better days ahead

Experts believe that the number of e-way bills generated on the GSTN portal will continue to rise from now on. Economic activities started to a fair extent from May 17. Private sector saw much relaxations, a part of its employees started attending office work, while app cabs, shops, markets and other commercials hubs started to reopen.

Besides announcing a slew of economic reforms, the Centre has initiated some relief measures concerning the GST/indirect tax and customs.

This is obviously some sort of a relief for all of us. For we all want to move ahead from the clutches of Covid-19 pandemic and its nightmarish effects.

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