Enumerate the indirect taxes which have been subsumed in the Goods and Services Tax (GST) in India. Also, comment on revenue implications of the GST introduced in India since July 2017.
The GST was a big bang reform which sought to integrate numerous taxes and reduce the number of agencies.
Taxes subsumed in GST
Central Taxes
- Central Excise duty (CENVAT)
- Service Tax
- Additional Excise Duties
- Excise duty (Medicinal & Toiletries Preparation Act)
- Additional duties of Customs
- Surcharges and Cess
State Taxes
- State VAT
- Sales Tax
- Purchase Tax
- Entertainment Tax
- Luxury Tax
- Entry Tax
- Taxes on lottery, betting & gambling
- State Surcharges & Cess
Revenue Implications of GST
Hits
- The assessee base under GST has increased by about 85 per cent in the past two years. On the eve of the GST rollout, the assessee number stood at around 65 lakh in the pre-GST regime which has gone up to 1.20 crore now.
- Increase in assessee base has also translated in to increase in the revenue. The average revenue collection per month in the eight months of 2017-18 was Rs 89,700 crore per month. This propelled the annual revenue collection by about 12 per cent.
- The monthly average revenue collection increased further in 2018-19 by about 10 per cent to Rs 97,100 crore.
Misses
- The GST collection was estimated at Rs 7.4 lakh crore 2018-19 budget and the revised estimate in the 2019-20 interim budget stood at Rs 6.4 lakh crore. Whereas the actual revenue collection stood at around Rs 5.8 lakh crore. There was a significant shortfall of over 20 per cent compared to budget projection.
- The 2019-20 interim budget projected GST collection was Rs 7.6 lakh crore. But the inflows fall short of the target and the average GST collection for April and May 2019 was over 10 per cent lower than the corresponding figures for 2018.
Way Forward
The GST was sold as One Nation One Tax, but the multiple tax rates have negated the basic idea of having less cumbersome taxation. Items like petroleum products, alcohol are still outside the ambit of GST. The government must focus to bring all trade under GST and reduce the multitude of tax rates.