Goods and Services Tax (GST)

GST collections hit 5-month high

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Revenue receipts

Mains level : GST

India’s gross Goods and Services Tax (GST) revenues crossed ₹1.17 lakh crore in September, hitting a five-month high.

Take a look towards the share of GST in government earnings for the previous fiscal:

UPSC can ask about the majority component of the Revenue Receipts of the govt. See how Corporate tax is nearing the GST revenues.

Do you think it will surpass GST revenue when the economy is fully recovered?

What is the news?

  • September’s revenues were 23% higher than a year ago and 27.3% more than collections in the pre-pandemic month of September 2019.
  • Revenues from import of goods were 30% higher while indirect tax collected on domestic transactions, including the import of services, were 20% higher in September, compared to the same month in 2020.
  • Among the major States, GST revenues grew 29% in Karnataka, 28% in Gujarat, followed by 22% in Maharashtra and 21% each in Tamil Nadu and Andhra Pradesh.
  • Telangana recorded a 25% surge in revenues, while Odisha saw a sharper 40% rise.

Significance

  • This clearly indicates that the economy is recovering at a fast pace.
  • Coupled with economic growth, anti-evasion activities, especially action against fake billers have also been contributing to the enhanced GST collections.
  • It is expected that the positive trend in the revenues will continue and the second half of the year will post higher revenues.

Issues underlying

  • Though GST revenues are picking up pace after the impact of the Covid-19 pandemic, revenue buoyancy under GST is being seen as a concern.
  • This is especially after the legally mandated compensation to states for revenue shortfall from the GST implementation comes to an end in June 2022.

Back2Basics: Goods and Services Tax

  • The GST is a value-added tax levied on most goods and services sold for domestic consumption.
  • It was launched into operation on the midnight of 1st July 2017.
  • It subsumed almost all domestic indirect taxes (petroleum, alcoholic beverages, and stamp duty are the major exceptions) under one head.
  • The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services.
  • GST is levied at four rates viz. 5%, 12%, 18% and 28%. The schedule or list of items that would fall under these multiple slabs is worked out by the GST council.

Types

  • The GST to be levied by the Centre is called Central GST (CGST) and that to be levied by the States is called State GST (SGST).
  • Import of goods or services would be treated as inter-state supplies and would be subject to Integrated Goods & Services Tax (IGST) in addition to the applicable customs duties.

The GST Council

  • It is a constitutional body (Article 279A) for making recommendations to the Union and State Government on issues related to GST.
  • The GST Council is chaired by the Union Finance Minister and other members are the Union State Minister of Revenue or Finance and Ministers in charge of Finance or Taxation of all the States.
  • It is considered as a federal body where both the centre and the states get due representation.
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