Business Standard

50% increase in indirect taxpayers post GST


ANI New Delhi [India]
There has been a fifty percent increase, a substantial 3.4 million in the number of indirect taxpayers post the introduction of Goods and Services Tax (GST), the Economic Survey 2017-18 noted on Monday.
Many have voluntarily chosen to be part of GST, especially small enterprises that buy from large enterprises and want to avail themselves of Input Tax Credit (ITC).
The Economic Survey presented today in Lok Sabha by the Finance Minister Arun Jaitley noted that as on December 2017, there were 9.8 million unique GST registrants, slightly more than the total Indirect Tax registrants under the old system, where many taxpayers were registered under several taxes.
Further, the profile of new filers is extremely interesting to note.
Business-to-Consumer (B2C) transactions account for only 17 percent of the total.
The bulk of transactions are business-to-business (B2B) and exports, which account for 30-34 percent apiece.
Out of the total estimated 71 million non-agriculture enterprises, it is estimated that around 13 percent are registered under the GST.
Maharashtra, Uttar Pradesh, Tamil Nadu and Gujarat are the states with the greatest number of GST registrants.
Uttar Pradesh and West Bengal have seen a large increase in the number of tax registrants compared to the old tax regime.
This also underlines that the distribution of the GST base among the states is closely linked to the size of their economies, allaying fears of major producing states that the shift to the new system would undermine their tax collections.
Dwelling on the subject of international trade, inter-state trade and economic prosperity, the survey pointed-out that for the first time in India's history five states, namely Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana account for 70 percent of India's exports.
The new data on the international exports of states suggests a strong correlation between export performance and the standard of living in the states.
Last year, the survey had estimated that India's inter-state trade in goods was between 30 and 50 percent of GDP.
But the GST data suggests that India's internal trade in goods and services (excludes non-GST goods and services) is actually even higher and is about 60 percent of GDP.
The survey based on new GST data also provides a close look at the firm-level exports and states that India's exports are unusual in that the largest firms account for a much smaller share of exports than in other comparable countries.
Export concentration by firms is much lower in India than in the US, Germany, Brazil, or Mexico.
The top one percent of firms accounted for 72, 68, 67 and 55 percent of exports in Brazil, Germany, Mexico, and USA respectively but only 38 percent in the case of India.
Similarly, the top five percent accounted for 91, 86, 91 and 74 percent in those countries, compared with 59 percent in India and the top 25 percent of firms accounted for 99, 98, 99 and 93 percent in those countries, as opposed to 82 percent in India.
Referring to India's formal sector, especially formal non-farm payroll, the survey says it is substantially greater than currently believed.
Formality defined in terms of social security provision yields an estimate of formal sector payroll of about 31 percent of the non-agricultural work force; formality defined in terms of being part of the GST net suggests a formal sector payroll share of 53 percent.
The survey also sums up the implications for the Revenue Neutral Rate (RNR).
The RNR Committee had estimated a base of Rs 68.8 lakh crore and the GST Council had estimated a base of Rs 65.8 lakh crore.
The current data suggests that the GST tax base, excluding exports is Rs 65-70 lakh crore, broadly similar to these two previous estimates.
Based on the average collections in the first few months, the implied weighted average collection rate is about 15.6 percent.
So, as estimated by the RNR Committee, the single tax rate that would preserve revenue neutrality is between 15 to 16 percent.

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First Published: Jan 29 2018 | 6:35 PM IST

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