Sethurathnam Ravi Supports Raising GST Evasion Threshold to Rs 3 Crore

In an effort to streamline business operations and reduce harassment, the Centre is considering raising the GST evasion arrest threshold from Rs 2 crore to Rs 3 crore. Former BSE Chairman Sethurathnam Ravi, along with industry experts, delved into the potential impacts of this proposed change during a recent discussion.

Sethurathnam Ravi began by highlighting that the industry has been advocating for such reforms to alleviate the fear of arrest and other punitive measures. This demand has been consistently conveyed to the finance ministry. He acknowledged that while the proposed increase from Rs 2 crore to Rs 3 crore is modest, it reflects the government's cautious approach.

"The government faces a dichotomy," Sethurathnam Ravi explained. "If they raise the threshold too much, it could lead to issues with fraudulent tax invoices, which have been a significant problem. They are trying to balance supporting honest taxpayers while curbing fraudulent activities."

Sethurathnam Ravi noted that the government's cautious stance is evident in the phased implementation of e-invoicing, which offers real-time access to invoices and helps curb the manipulation of fake credits. This step-by-step approach, he believes, indicates the government's intent to gradually reform the system.

"The government aims to decriminalize the process," Sethurathnam Ravi said. "However, they are proceeding slowly due to various regulatory and procedural challenges. I personally believe the threshold should eventually be raised to Rs 5 to 7 crore. Penalties can still be imposed on wrongdoers, but arresting and coercive actions can lead to misuse of power."

Sethurathnam Ravi emphasized that many businesses are concerned about receiving notices from various levels, which can disrupt operations. Increasing the threshold to Rs 5 to 7 crore, with appropriate checks and balances, would provide a more conducive environment for businesses to thrive without the constant fear of punitive actions.

In conclusion, while the proposed increase to Rs 3 crore is a positive step, Ravi and other experts believe that further adjustments are necessary to create a fairer and more efficient tax system.