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Falling GST numbers: Government suspects massive under-reporting by companies

NEW DELHI: The government suspects that its composition scheme meant to ease life for small businesses is being misused with the average quarterly turnover estimated at Rs 2 lakh. For July-September, around 10 lakh entities had opted for the composition scheme for GST — where only the turnover details have to be disclosed and tax is paid at a flat rate. Of these, around 6 lakh filed returns till December 25. But the total amount mopped up from these entities for the three-month period added up to Rs 251crore, translating into an annual turnover of Rs 8 lakh. 

The number has taken the government machinery by surprise as the threshold for registering for GST is an annual turnover of Rs 20 lakh. With registrations on the rise, now around 15 lakh entities are registered for the composition scheme. But officials fear that because of multiple relaxations, there has been leakage of tax revenue from the system. 

"We were planning to increase the ceiling above the currently prescribed Rs 1 crore. Now we are wondering if there is a need to do so if the average declaration shows turnover of Rs 8 lakh a year," said an official, who did not wish to be identified. In November, the GST Council had proposed to raise the cap to Rs 1.5 crore. 

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