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Finance Ministry To Go In For Cash-Basis Accounting To Fix Revenue Collection Lag In GST
A shopkeeper showing new updated GST bill New Delhi, India. (Ravi Choudhary/Hindustan Times via Getty Images)
Looking to fix the lag in revenue accrual, the Ministry of Finance has decided that from the current fiscal onwards, it will migrate to a new cash basis accounting for the Goods and Services Tax (GST) where monthly collections will be reported on the first working day of the next month, reports PTI. Currently, monthly tax returns under the GST could be filed by the 20th of the next month and the revenue collections were reported on the 26th, resulting in a nearly one month-long lag between the collection and reporting.
The GST regime became operational on 1 July 2017, amalgamating 17 central and state-level taxes into a single tax system.
To fix the lag caused due to the existing system of reporting, the GST Network – which operates the system – will start by reporting collections for the month of April on 1 May itself.
While GST collections for the month of March should have been reported this week, the GSTN will only report the collections from Integrated GST – collections from imports and inter-state movement of goods – of Rs 20,000 crore in order to enable a smooth switchover to the cash-basis accounting method.
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