Enumerate the indirect taxes which have been subsumed in the Goods and Services Tax (GST) in India. Also, comment on the revenue implications of the GST introduced in India since July 2017. UPSC IAS Mains 2019 General Studies Paper – 3)
Goods and Services Tax (GST) is an indirect, comprehensive, multi-stage, destination-based tax that is levied on every value addition.
The Goods and Service Tax Act was passed in the Parliament in March 2017. The Act came into effect on 1st July 2017.
At the Central level, the following taxes have been subsumed in the GST:
- Additional Excise Duty
- Service Tax
- Countervailing Duty
- Special Additional Duty of Customs
At the State level, the following taxes have been subsumed in the GST:
- State Value Added Tax/Sales Tax,
- Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States)
- Octroi and Entry tax
- Purchase Tax
- Luxury tax
- Taxes on lottery, betting and gambling
Revenue implications of GST since July 2017:
- GST was introduced in July 2017. After the initial transitional issues following the roll-out of GST, revenue collection picked up from an annual average of 89.8 thousand crores in 2017-18 to 98.1 thousand crores in 2018-19.
- However in 2018-19, indirect taxes have fallen short of budget estimates by about 16 per cent, following a shortfall in GST revenues (including CGST, IGST and compensation cess) as compared to the budget estimates. Indirect taxes have fallen by 0.4 percentage points of GDP primarily due to shortfall in GST collections.
- According to the Economic Survey, though there has been an improvement in tax to GDP ratio over the last six years, gross tax revenues as a proportion of GDP has declined by 0.3 percentage points in 2018-19 over 2017-18.
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