It is a well-known fact that the Goa Government has struggled to grow its tax revenue ever since the rollout of Goods and Services Tax (GST). Without growth in tax collections, the only way to fund development projects is by borrowing more and more, which is not financially sustainable.
In the ongoing year itself, the government has borrowed time and again for routine expenditure. It is high time that the government seriously finds ways to grow its own tax revenue so that its dependence on borrowings becomes lesser and lesser.
Starting from November 1, the Commercial Taxes Department has started GST enforcement drive to find out businesses, which are not paying taxes properly. The fact that the drive has begun just when the tourism season is starting clearly shows that the government is going to keep a very close watch on hospitality players, who are not paying their tax liability.
Earlier in the year, some very prominent hotels had not paid their GST liability adequately. Often, organisers of music and dance events also don’t pay tax to the government. The Commercial Taxes Department will have to ensure that such wilful defaulters are taken to task.
At the moment, there are teams of tax officers on the ground in Goa trying to find businesses not complying with GST rules. They are checking invoices, e-way bills and other documents to find the culprits. As a move, it is appreciable, but it all depends upon whether such an enforcement drive is able to find out defaulters or not.
The GST compliance rate had dropped from 67% in August to 59% in September. Senior officials say that this percentage has to be at least 75% for the government to be satisfied with its tax administration. For the compliance rate to improve, the enforcement drive has to be really effective.
There is another tendency among businesses to not file GST returns by adhering to the deadline. A lot of such people are plain lazy and not wilful defaulters. They end up filing tax returns later by paying some interest. It has to be analyzed as to why such businessmen are delaying GST payment.
By paying the tax late, they perhaps are earning more interest on the payment they are withholding than the interest they pay to the government. Or, maybe, there are some working capital issues with them. It is important for the government to get to the bottom of this issue.
It must also be appreciated that mining is shutdown and tourism is going through a slowdown. Two main sectors of Goa’s economy are witnessing turbulent phase. It is going to be no mean task to grow tax revenue in a situation like this. That said the ongoing GST enforcement drive is a step in the right direction.
