{"id":186747,"date":"2022-05-27T20:48:02","date_gmt":"2022-05-27T15:18:02","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=186747"},"modified":"2022-05-27T20:48:02","modified_gmt":"2022-05-27T15:18:02","slug":"making-sense-of-the-gst-bonanza","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/making-sense-of-the-gst-bonanza\/","title":{"rendered":"Making sense of the GST bonanza"},"content":{"rendered":"\n

News<\/strong>: There has been a remarkable upswing in GST collections in recent months. In fact, collections touched a record high of Rs 1.67 lakh crore in April.<\/p>\n

What are the reasons behind an inc in the GST collections?<\/h5>\n

First,<\/strong><\/em> the sharp rise in inflation<\/strong> has played a significant role. After all, as output turnover increases, taxes paid per filing will automatically increase. Thus there is a price effect. However, even after taking away the price effect, collections have grown at a pace faster than GDP, indicating an increase in buoyancy.<\/p>\n\n\n\n
When a tax collects greater revenue without changing the rate of taxing, it is said to be buoyant.<\/span><\/span><\/em><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Second,<\/strong><\/em> part of the overall increase in collections can be traced to higher imports<\/strong>. But even if one is to exclude the revenue accruing from imports, the rise in GST collections has outstripped GDP growth, indicating higher buoyancy.<\/span><\/span><\/p>\n

Third,<\/strong><\/em> in order to improve compliance levels, the GST Council has been modifying the rules to tighten the system<\/strong>. This can be observed at multiple levels.<\/p>\n

–<\/strong> Earlier, filers could get away without submitting returns for a few months. But the screws have now been tightened. As a consequence, returns filed have gone up, while the number of non-filers and those who delay filing have fallen.<\/p>\n

–<\/strong> Alongside, the administration has also taken steps to tackle the menace of fake invoices<\/strong> by placing restrictions on the quantum of input tax credit that can be used to pay off tax obligations.<\/p>\n

–<\/strong> The introduction of e-invoicing<\/strong> has also played a role. Until recently, this was being implemented for firms with a turnover of more than Rs 50 crore. From April, this process has been extended to firms above Rs 20 crore.<\/p>\n

Fourth<\/strong><\/em>, some part of the revenue gains are likely to have accrued due to the changing structure of the economy<\/strong>.<\/p>\n

–<\/strong> The formalisation of firms, the growing concentration of economic power in the hands of a few, imply that for the same level of output, the tax paid will be higher.<\/p>\n

This explanation is also in line with data that shows a rise in GST registrations, filings and tax paid per registration.<\/p>\n

Way forward<\/h5>\n

Considering that some of the drivers discussed above are unlikely to sustain at current levels, tax rates will need to be raised<\/strong> to fulfil expectations of higher collections. However, this requires careful consideration.<\/p>\n

Lower compliance levels and greater exemptions require higher rates to garner the same level of revenues. Hence, compliance must be improved.<\/p>\n

Considering the current economic situation, now may not be an opportune moment to raise taxes.<\/strong> But there is no getting around it. Both the Centre and the states need to work towards this.<\/p>\n

Source<\/strong>: This post is based on the article \u201cMaking sense of the GST bonanza<\/strong>\u201d published in The Indian Express<\/strong> on 27th May 22<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

News: There has been a remarkable upswing in GST collections in recent months. In fact, collections touched a record high of Rs 1.67 lakh crore in April. What are the reasons behind an inc in the GST collections? First, the sharp rise in inflation has played a significant role. After all, as output turnover increases,… Continue reading Making sense of the GST bonanza<\/span><\/a><\/p>\n","protected":false},"author":10328,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10500],"class_list":["post-186747","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-indian-express","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704908824},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/186747","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10328"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=186747"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/186747\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=186747"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=186747"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=186747"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}