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January 28, 2021

Kerala Budget 2021 proposes strengthening State GST Department Kerala Flood Cess discontinuation.

by CA Shivam Jaiswal in Budget

Kerala Budget 2021 proposes strengthening State GST Department Kerala Flood Cess discontinuation.

In a budget speech 2021-22 by the government of Kerala on the date of January 15, 2021 following important announcements were made:

Kerala Budget 2021 proposes an efficient mechanism for State GST department in order to collect revenue according to ‘destination principle’ owing to ‘below expected revenue yield’ for last 3 years resulting from non-operationalization of GSTR -1, 2, 3 return system & other technical glitches; To maintain strong fiscal situation in the coming years in the post compensation period also, the Budget accounts for increase in  number of GST officials allocated to GST return scrutiny;

Apprises of the strong measures undertaken to improve the efficiency of State GST Department, inter-alia lists down that the resource mobilisation includes

  • (i) procurement of “Third Party Information & Data Analysis”, whose reports are being used to investigate tax evasion and to match data in the G.S.T. return declarations and
  • (ii) equipping GST officers with mobile apps;

Mentions that, ‘E-invoices have been made mandatory for dealers having turnover above 100 Crores’ and new Rules are incorporated to mandate payment of 1% tax in cash for tax payers having annual turnover above 6 Crore;

In terms of infrastructure development, reports following developments,

  • (i) GSTAT, Thiruvananthapuram HQ to start functioning this year,
  • (ii) Construction of New Tax Complexes at Kannur, Alappzuha and additional Tax Complex at Ernakulam;
  • (iii) State GST officers are being trained with aid of Gulati Institute of Finance and Taxation;

As far as ‘Tax Payer Services’ are concerned, announces following developments

  • (i) Restructuring of State GST Department to include separate wings for Tax Payer Services, Audit, Enforcement and Intelligence,
  • (ii)  E-office system to be implemented in all offices,
  • (iii) Tax Payer Report Card will be issued to all assessees
  • (iv) SGST Review mechanism will be reinforced;

On topic of Kerala Flood Cess, announces that period of Kerala Flood Cess levied at 1% on GST implemented in the backdrop of the 2018 floods will be over by July 2021 which will be discontinued afterwards;

Further, annunciates to strike a balance between additional court fees leviable under CGST & SGST by fixing a limit for the additional court fee for appeals filed by tax payers under the State GST authorities. 

  • G.S.T., though implemented with great expectations, has not yielded the desired revenue growth for the past three years. Due to non-operationalisation of the G.S.T.R -1, 2, 3 return system, and other technical glitches.
  • Return Scrutiny:- The scrutiny of G.S.T return has started. Majority of the officials are now allocated to G.S.T. related activities. Scrutiny of around 36000 G.S.T. returns was completed in 2020-21 financial year. Wherever the defects are found, notices have been issued.
  • Third-Party Information and Data Analysis:- By utilising Data Analytics, sectoral analysis of goods and services have started. The reports thus generated are being used to investigate tax evasion. Data gathered from other sources are also used to match with the G.S.T. return declarations.
  • Automatic Number Plate Reading System:- Surveillance Cameras have been deployed in State borders. Now important transport routes in various districts are under camera surveillance of the department. The information gathered is used to detect tax evasion.
  • Mobile Apps:- To verify the authenticity of G.S.T. Registrations and to collect data regarding tax payers who have not taken registrations, the officers are now equipped with Mobile Apps.
  • E-invoice:- E-invoices have been made mandatory for dealers having turnover above 100 Crores.
  • Action against Fake Invoice:- Rules have been amended to mandate that the tax payers having annual turnover above 6 Crore to pay one percent of tax in Cash.
  • Informer Scheme:- A scheme was implemented for incentivizing the informants who furnish information on tax evasion.
  • Vehicle Checking:- 24X7 Vehicle Checking has been strengthened by deploying Surveillance Squads.
  • Goods and Services Tax Appellate Tribunal with headquarters at Thiruvananthapuram will start functioning this year.
  • New Tax Complexes at Kannur, Alappzuha and additional Tax Complex at Ernakulam will be constructed in the new financial year.
  • All officials of the State G.S.T. Department are being trained with the co-operation of the Gulati Institute of Finance and Taxation. For this a training calendar will be prepared. Training will be mandated for the declaration of probation of Officers of and above the cadre of Asst. State Tax Officer.
  • Tax Payer Report Card:- All tax payers will be issued with Tax Payer Report Cards. This will help the tax payer in obtaining prompt and efficient tax payer services. This can be used by the financial institutions and banks as credit rating criteria.
  • Kerala Flood Cess:- The period of Kerala Flood Cess levied at 1% on GST implemented in the backdrop of the 2018 floods will be over by July 2021. This cess will not be levied further.
BudgetSpeech-2021-22-English_12_removed_removed-1

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