- According to revised Finance Ministry figures, India’s Goods and Services Tax (GST) revenues increased 12.7% in January to nearly 1.59 lakh crore ($17.9 billion), the second-highest monthly collections on record.
What caused the increase in GST revenue collection?
- Economic recovery: Discusses how India’s steady economic recovery has resulted in increased consumption and spending, resulting in higher GST collections.
- Tax evasion is being prosecuted: The government implemented several measures to streamline the GST system and reduce tax evasion, including e-invoicing and the use of technology to track compliance.
- Crackdown on false claims: The government’s efforts to combat fraudulent ITC claims have also contributed to an increase in GST collections.
- Imports have increased: Another reason for the increase in GST collections from imports is the increased value of imported goods due to rising commodity prices.
What exactly is GST?
- GST is an indirect tax that has largely replaced many indirect taxes in India, including excise duty, VAT, and services tax.
- The Goods and Services Tax Act was passed by Parliament on March 29, 2017 and went into effect on July 1, 2017.
- It is a single domestic indirect tax law that applies throughout the country.
- It is a multi-stage, destination-based tax that is levied on all value additions.
- The GST regime imposes the tax at every point of sale. Intra-state sales are subject to both Central GST and State GST. All interstate sales are subject to the Integrated GST.
What are the GST components?
Under this system, three taxes are levied:
- The Central Government’s tax on intra-state sales is known as CGST (e.g., a transaction happening within Maharashtra)
- SGST: This is the tax levied by the state government on intra-state transactions (e.g., a transaction happening within Maharashtra)
- IGST: It is a tax levied by the Central Government on interstate transactions (e.g., Maharashtra to Tamil Nadu)
GST Advantages
- The cascading effect of GST on the sale of goods and services has largely been eliminated.
- The removal of the cascading effect has had an effect on the cost of goods.
- Because the GST regime eliminates the tax on tax, the price of goods falls.
- Furthermore, GST is primarily driven by technology.
- All activities such as registration, return filing, refund application, and response to notice must be completed online on the GST portal, which speeds up the processes.
Problems with GST
- High operational expenses
- GST has increased the complexity for many business owners across the country.
- GST has been chastised for being dubbed a “Disability Tax” because it now taxes items such as braille paper, wheelchairs, hearing aids, and so on.
- Petrol is not subject to GST, which contradicts the ideals of commodity unification.
Source: https://www.thehindu.com/business/Economy/gst-revenues-grew-127-in-january/article66544198.ece#:~:text=India's%20Goods%20and%20Services%20Tax,figures%20from%20the%20Finance%20Ministry.