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Context
The Goods and Services Tax has resulted in a 50% increase in the number of indirect taxpayers, the Economic Survey said, adding the fledgling tax regime has already revealed new data on key aspects such as inter-State trade, State-wise exports, and the extent of formalisation in the economy
Voluntary enrolment by small firms lifts number of indirect taxpayers by 50%
“There has been … a large increase in voluntary registrations, especially by small enterprises that buy from large enterprises and want to avail themselves of input tax credits,” the Survey said.
Tax credit preference
In addition, the Survey showed a significant proportion of tax filers eligible for the Composition Scheme have instead opted to file their returns in the regular manner so as to avail of input tax credits
So, about 54.3% of those eligible for the composition scheme chose instead to be regular filers.
Formal sector larger in India
Further, GST data showed that the formal sector in India was larger than earlier thought. “Formality defined in terms of social security provision yields an estimate of formal sector payroll of about 31% 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%,”
