Sethurathnam Ravi discusses the Centre's proposal to raise the GST evasion arrest threshold to Rs 3 crore and its potential impact on businesses.
The Centre's move to increase the GST evasion arrest threshold from Rs 2 crore to Rs 3 crore is aimed at reducing harassment and making it easier for businesses to operate. In a recent discussion with Tarun Nangia and industry experts, Sethurathnam Ravi, former Chairman of the Bombay Stock Exchange (BSE), offered his perspective on this significant change.
Sethurathnam Ravi opened by acknowledging that the industry has long called for higher thresholds to mitigate the fear of arrest and punitive actions. He pointed out that this demand has been communicated to the finance ministry through various forums. Despite the modest increase from Rs 2 crore to Rs 3 crore, Ravi sees it as a step in the right direction.
"The government's challenge is to find a balance," Sethurathnam Ravi said. "A significant increase in the threshold could lead to more fraudulent tax invoices. The government needs to support honest taxpayers while preventing fraud."
Sethurathnam Ravi praised the government's phased approach to e-invoicing, which provides real-time access to invoices and reduces the potential for fake credit manipulation. This cautious method, he believes, shows the government's intent to gradually improve the system.
"The intention is to decriminalize the process," Sethurathnam Ravi added. "But the government is moving slowly due to regulatory and procedural complexities. I think the threshold should eventually be raised to Rs 5 to 7 crore. While penalties can be imposed on wrongdoers, arresting and taking coercive actions can lead to power misuse."
He also highlighted the concerns of many businesses about the disruption caused by receiving notices from various levels. Raising the threshold to Rs 5 to 7 crore, with proper checks and balances, would create a more supportive environment for businesses to operate without fear of punitive measures.
In summary, while the proposed increase to Rs 3 crore is a welcome change, Sethurathnam Ravi and other industry experts believe that further adjustments are needed to ensure a fair and efficient tax system.