By Pritam Mahure, CA
THE Economic Survey 2017-18 (ES) that was tabled today mentions the following about the Good and Simple Tax.
1. GST recognized as a major policy developments
ESacknowledges that last year was marked by a major domestic policy developments i.e. introduction of transformational Goods and Services Tax (GST) was launched on 1 st July 2017.
2. Teething difficulties in GST
ES also concedes that there were teething difficulties in the new GST. ES also states that GST affected supply chains, especially those in which small traders (who found it difficult to comply with the paperwork demands) were suppliers of intermediates to larger manufacturing companies. Thus, ES states that the Government agenda for the next year should be stabilizing the GST to remove uncertainty for exporters and facilitate easier compliance.
3. Demonitisation and GST has increased income taxpayers
ES states that one of the aims of demonetization and GST was to increase the formalization of the economy, bring more Indians into income tax net and to curb black money. ES states that demonetization and GST have increased personal income tax collections substantially and thus succeeded in achieving the stated objectives.
4. Anti-profiteering benefits yet to reach consumers
ES states that underlying inflation has been increasing at a more modest pace as firms are passing the incidence of GST on to final consumers only gradually.
5. Revenue collections
ES states that the GST promises to be a buoyant source of future revenues as GST collections are surprisingly robust and in long run, CGST collections would be close to SGST collections . ES agrees that the eventual outcome in indirect taxes during this year will depend on the final settlement of GST accounts between the Centre and the States.ES states that the expected revenues from GST becoming increasingly clearer, the fiscal balance of the General Government vis-à-vis budget estimates will depend on the emerging patterns of revenue in days to come.
6. ‘Cooperative federalism’ is the future!
Looking at successful implementation of GST, the ES states that the “cooperative federalism technology” of the GST Council could be used to create a common agricultural market, integrate fragmented and inefficient electricity markets, solve interstate water disputes, implement direct benefit transfers (DBT), make access to social benefits portable across states and combat air pollution.
7. Fate of petroleum and electricity
ES agrees that the GST Council should conduct a comprehensive review of embedded taxes arising from products left outside the GST (petroleum and electricity) and those that arise from the GST itself (for example, input tax credits that get blocked because of “tax inversion” whereby taxes further back in the chain are greater than those up the chain). ES states that this review should lead to an expeditious elimination of these embedded export taxes, which could provide an important boost to India’s manufacturing exports.
Since the Economic Survey 2017-18 lays much emphasis on GST, the industry eagerly awaits a procedural simplification roadmap in the Union Budget 2018.
Source : https://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=32423