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Indirect tax base grew 50% since the GST roll-out, says Economic Survey

Maharashtra, Uttar Pradesh, Tamil Nadu and Gujarat have the largest number of GST registrants

Dilasha Seth  |  New Delhi 

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Bolstered by sharp growth in the base, goods and services (GST) revenue mop-up has been ‘surprisingly robust’ despite ‘teething difficulties’, said the

The base grew 50 per cent since the roll-out, led by a large increase in registrations, especially by small enterprises. The demonetisation of high-value currency notes in November 2016 resulted in widening of taxpayers’ base, the Survey said. 

As of December 2017, there were 9.8 million unique registrants, slightly more than registrants under the earlier system. Although not comparable, has increased the number of unique taxpayers by more than 50 per cent, a substantial 3.4 million. “The two numbers are not comparable. Registrants in the old system were not unique, since many taxpayers were registered under several taxes,” the Survey said.

Maharashtra, Uttar Pradesh, and Gujarat have the largest number of registrants.

Annual for 2017-18, based on the five-month average till November, was Rs 10.5 trillion, which is 8.2 per cent higher than collections last year of Centre and states combined, said the Survey, tabled in Parliament on Monday. 

The Survey highlighted that there was a potential of 12 per cent growth in revenue in the current fiscal year to Rs 10.9 trillion if a couple of additional factors were taken into account. One of these was equalising state with central  

Central collections have been lower than state collections due to higher refunds at the central level on pre-stocks.

After two months of slide, collections picked up slightly in December to Rs 867 billion. Amid slowing revenue, the Council had in its previous meeting decided to provisionally divide Rs 350 billion collected as Integrated between the Centre and states.

The informal sector was the most affected by implementation. “The government will also need to stabilise implementation to remove uncertainty for exporters, facilitate easier compliance and increase the base,” the Survey said.

also affected supply chain functions, especially where small traders were suppliers to intermediaries for larger manufacturing companies, as they found it difficult to comply with the increased paperwork.

To address concerns, the Council has reduced the rates on more than 300 items since the roll-out in July. With Finance Minister Arun Jaitley hinting at converging the 12 per cent and 18 per cent slabs in the future, the Survey said 15-16 per cent was the single rate that would preserve revenue neutrality, based on average collections in the first few months. The implied weighted average rate (incidence) was about 15.6 per cent, it said.

Cooperative federalism technology

The model of cooperative federalism could be emulated to tackle a wide array of difficult structural problems involving states, the Survey said. Over the medium term, cooperative federalism could be used to create a common agricultural market, integrate fragmented and inefficient electricity markets, solve interstate water disputes, implement direct benefit transfers, make access to social benefits portable across states and combat air pollution.

“Cooperative federalism is, of course, not a substitute for states’ own efforts at furthering economic and social development. But it is a critical complement,” the Survey said.

Indirect tax base grew 50% since the GST roll-out, says Economic Survey

First Published: Tue, January 30 2018. 05:28 IST
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