General Studies Question With Answer Set-1
||General Studies Question With Answer Set-1||GS Question With Answer Set-1||
1. 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? (150 words)
Ans. Goods and Services Tax (GST) is an indirect tax imposed in the country on the supply of goods and services. It is a comprehensive multistage and destination based tax levied on the goods and services sold across India. It is imposed at every step in the production process and is collected from point of consumption rather than the point of origin. Goods and Services are divided into five different tax slabs for collection of tax: 0%, 5%, 12%, 18% and 28%. However, petroleum products, alcoholic drinks and electricity are not taxed under GST and instead are taxed separately by the individual state governments, as per the previous tax regime. It is divided into CGST, SGST and IGST. For intrastate goods and services CGST and SGST are levied whereas for interstate transactions IGST is levied. The tax came into effect from July 1, 2017 through the 101 Amendment in the Constitution. The tax replaced multiple flowing taxes levied by the central and state governments earlier.
The subsumed taxes include:
(i) Central Excise Duty.
(ii) Duties of Excise.
(iii) Additional Duties of Excise.
(iv) Additional Duties of Customs.
(v) Special Additional Duty of Customs.
(vi) Cess.
(vii) State VAT.
(viii) Central Sales Tax.
(ix) Luxury Tax.
(x) Entertainment Tax.
(xi) Entry Tax.
(xii) Taxes on advertisements.
(xiii) Taxes on lotteries, betting and gambling.
Revenue Implications of GST Since its Origin (July 2017)
(i) The revenue base under GST has increased by about 85 per cent in the past two years. Increase in the base has also translated into increase in the revenue.
(ii) The average revenue collection per month in the eight months of 2017-18 were 90,000 crore per month. Due to this, the annual revenue collection increased by about 12 per cent compared to the previous figures.
(iii) The tax buoyancy was 1.2 in the initial year. This was much better as compared to the tax buoyancy in the previous tax regime which was 1.
(iv) The monthly average revenue collection increased further in 2018-19 by about 10 per cent to 97,000 crore.
(v) Under the new tax regime, as many as 20 states have independently shown more than a 14 per cent increase in their revenues.
(vi) Despite these successes, the GST has shown some dampening trends as well.
For example, Finance Ministry’s figures show that the actual GST collection for 2018-19 was short by around 20 per cent compared to budget projection. Things could improve as the new changes done from time to time stabilises the revenue to move it towards the growth trajectory.
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