The Centre has projected a sharp increase of 26.6 per cent in non-Goods and Services Tax collection in 2022-23, making up for a loss on account of expiry of compensation cess provision.
The Centre has projected a sharp increase of 26.6 per cent in non-Goods and Services Tax collection in 2022-23, making up for loss on account of expiry of compensation cess provision.
In the same year, total GST collection is expected to gross Rs 9,80,807 crore, a growth of just 2.3 per cent compared to 12.1 per cent and 12.3 per cent in FY21 and FY22, respectively. The government has estimated to mop up Rs 7.61 lakh crore in GST collection during 2019-20.
“GST Compensation cess will be levied till June, 2022. About 80 per cent amount will have to be collected by way of central excise)/others. Around 20 per cent of the amount could be shifted to CGST/SGST from July, 2022 onwards,” an internal projection by Central Board of Indirect Taxes and Customs (CBIC) has revealed.
In order to make up for loss of revenue to states, Section 7 of the GST (Compensation to States) Act, 2017 provides for compensating the states for any revenue loss in the initial five years of GST rollout.
Rolled out on July 1, 2017, the new indirect tax system now appears to have stabilised. The total GST collection has been rising month-on-month with the total mop-up touching all-time high of Rs 1,13,865 crore in April this year.
While the CBIC paper, reviewed by IANS, has not spelled out as to whether government will raise GST rates on certain items or new sectors would be brought under the purview of the new indirect tax regime, a senior tax partner said central excise and customs duty could go up after compensation levy goes.
In case the five-year period for levying compensation cess is not extended, many items, especially cars and soft drinks, will turn significantly cheaper. The government currently levies 28 per cent GST on cars and a compensation cess up to 15 per cent. In case, the compensation cess is removed, the cars would be cheaper to that extent.
But experts pointed out that government would unlikely allow revenue loss to exchequer given that it can raise GST rate upto 40 per cent in accordance with the ceiling provided in the legislation.
“It is very difficult to predict as to what will happen then. But an increase in GST rate can not be ruled out once the compensation cess provision comes to an end, ” said Pratik Jain, partner, PwC India.
Source : https://www.indiatvnews.com/business/news-government-projects-sharp-rise-non-gst-revenue-fy23-522905