From UPSC perspective, the following things are important :
Prelims level : GST, Major sources of revenue
Mains level : Success of the GST regime
The Gross Goods and Services Tax (GST) revenue in February was 26% higher than the pre-pandemic levels at ₹1,33,026 crore.
What is GST?
- GST is an indirect tax that has replaced many indirect taxes in India such as excise duty, VAT, services tax, etc.
- The Goods and Service Tax Act was passed in Parliament on 29th March 2017 and came into effect on 1st July 2017. It is a single domestic indirect tax law for the entire country.
- It is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
- Under the GST regime, the tax is levied at every point of sale. In the case of intra-state sales, Central GST and State GST are charged. All the inter-state sales are chargeable to the Integrated GST.
Answer this PYQ in the comment box:
Q.All revenues received by the Union. Government by way of taxes and other receipts for the conduct of Government business are credited to the (CSP 2015):
(a) Contingency Fund of India
(b) Public Account
(c) Consolidated Fund of India
(d) Deposits and Advances Fund
Post your answers here.
What are the components of GST?
There are three taxes applicable under this system:
- CGST: It is the tax collected by the Central Government on an intra-state sale (e.g., a transaction happening within Maharashtra)
- SGST: It is the tax collected by the state government on an intra-state sale (e.g., a transaction happening within Maharashtra)
- IGST: It is a tax collected by the Central Government for an inter-state sale (e.g., Maharashtra to Tamil Nadu)
Advantages Of GST
- GST has mainly removed the cascading effect on the sale of goods and services.
- Removal of the cascading effect has impacted the cost of goods.
- Since the GST regime eliminates the tax on tax, the cost of goods decreases.
- Also, GST is mainly technologically driven.
- All the activities like registration, return filing, application for refund and response to notice needs to be done online on the GST portal, which accelerates the processes.
Issues with GST
- High operational cost
- GST has given rise to complexity for many business owners across the nation.
- GST has received criticism for being called a ‘Disability Tax’ as it now taxes articles such as braille paper, wheelchairs, hearing aid etc.
- Petrol is not under GST, which goes against the ideals of the unification of commodities.
Take a look at 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?