India Economic Survey 2018: The Economic Survey 2017-18, which was released in Parliament on Monday ahead of the Union Budget 2018, is the first survey released after the implementation of the new indirect tax regime Goods and Services Tax, implemented in July-17.
India Economic Survey 2018: The Economic Survey 2017-18, which was released in Parliament on Monday ahead of the Union Budget 2018, which is to be presented by Finance Minister Arun Jaitley is the first survey released after the implementation of the new indirect tax regime Goods and Services Tax, implemented by the Narendra Modi-led government in July-17. Since its implementation, the GST had always had its set of issues, the most worrying among then was the dwindling revenues from tax collection.
Taking note of the impact of GST on India’s economy, Chief Economic Advisor, Arvind Subramanian said, “(GST) has given a new perceptive of the Indian economy and new data has emerged. There has been a fifty percent increase in the number of indirect taxpayers. There has also been a large increase in voluntary registrations, especially by small enterprises that buy from large enterprises wanting to avail themselves of input tax credits.”
The highlights of the economic survey relating to GST were there has been a 50% increase in number of indirect taxpayers; Large increase in voluntary registrations; distribution of GST base closely linked to size of economies; strong correlation between export performance and state’s standard of living and India’s formal sector was found to be substantially greater than currently believed.
Key Highlights of Economic Survey relating to GST
The Ministry of Finance last week said that one crore taxpayers have been registered under total revenue collections under GST so far till 24th January, 2018, and the collections for the month of December 2017 was at Rs. 86,703 crores. Barring the collections for the months of December, the collections had shown a downward trend. The GST revenues have been tapering since the implementation of the new indirect tax regime. Due to its implementation, global rating agencies point out that GST may have negatively impacted GDP growth.
Fitch had cut India’s GDP growth forecast by 20 basis points to 6.7% for FY18 and 10 basis points to 7.3%, the economic growth in the second quarter showed signs of recovery at 6.3% from a three-year low of 5.7% in the first quarter of the current fiscal year after the implementation of the ambitious tax regime of the GST.
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According to latest data, the total Goods and Service Tax collection has been Rs 80,808 crore in November. A sum of Rs 83,346 crore was collected as the total revenue collection under the GST for October. The challenge for the government is to ensure that the overall revenue does not go below the earlier indirect tax collections.
Apart from falling collections, the GST implementation had imposed various hurdles on the MSMEs, which included hassles in filing returns and problems in the GST Network. Prime Minister Narendra Modi has often termed GST as ‘good and simple tax’, adding that it will put an end to harassment of honest traders and small businesses while integrating country into one market with one tax.
Traders and small businessmen have often pointed out that they find the GST structure to be complex. In an email response to FE Online, Vijay Kalantri, President of All India Association of Industries (AIAI) said, “AIAI has been repeatedly communicating on that the GST structure has too many tax slabs. Such multiple tax slabs in the similar and allied products and services has created confusion and resulted in higher rates.” Multiple rates results in more complexity in compliance/return forms. This is the exact opposite of GST and the basic premise of ‘One Nation one tax’.”
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Traditionally, the Economic Survey was the government’s assessment of how the economy had fared in the last 12 months by summarising the economic and fiscal trends. Notably, the structure was changed by the government’s chief economic adviser, Arvind Subramanian, with the survey for 2014-15, wherein the document was divided into two parts. The first volume explored various themes of economic development. The second volume reflected on the state of the economy in the traditional format.