According to Centre’s estimates, the administration succumbed to Rs 45,682 crore in GST fraud by mid last year. It is said that government should clean its system first before introducing a flat GST rate across the nation so that taxpayers showing good behaviour are rewarded and taxpayers not following the system and evading taxes are punished. Vijay Kelkar, the architect of GST and former finance secretary, he said, “a single 10% rate applied on 70% of the economy yields 7% of GDP as tax revenues and even if we actually obtain a part of this, we are broadly okay.” The government’s task, therefore, is to have a carrot-and-stick policy to coax more businesses to pay tax and incentivise those who do.
