2023-07-01 15:01:51
Finance Minister Nirmala Sitharaman on Sunday said that GST (Goods & Services Tax) has boosted revenue buoyancy of States.
“Whether it is common consumer, whether it is the State government, a matter of tax buoyancy, whether it is making it digital and simpler, GST stands out as an exemplar,” Sitharaman said while addressing the GST Day celebration here. GST was introduced on July 1, 2017.
Before the introduction of GST, States’ revenue growth was 8.3 per cent, while nominal GDO growth rate was 11.5 per cent. This means tax buoyancy of 0.72 per cent. However, post GST, growth rate has been 12.3 per cent, while nominal GDO growth rate gas been 9.8 per cent. “This shows tax buoyancy of 1.22 per cent,” she said.
Further, even without compensation to States, tax buoyancy would be 1.15 per cent.
The buoyancy of a tax system measures the total response of tax revenue both to changes in national income (or Gross Domestic Products) and to discretionary changes in tax policies over time, and it is traditionally interpreted as the percentage change in revenue associated to a one percent change in income.
“GST has brought in greater buoyancy. Therefore, both Centre and States benefit. Today, no State’s (revenue) suffers post GST,” Sitharaman said while replying to allegation of some Opposition-ruled States talking regarding loss on account of new indirect tax regime. She emphasised that the multiplicity of taxes in the pre-GST regime resulted in a “tax-on-tax” effect, causing the same product to be taxed multiple times and hence becoming costlier for the consumers, she said at the GST Day 2023.
Giving a comparison of the tax rates pre and post-GST, Sitharaman said, “GST has done justice to the consumers by bringing the rates down compared to the previous regime”.
Before GST was introduced, India‘s indirect tax system was fragmented, where every State was effectively a distinct market for the industry as well as the consumer. She also pointed out that from the time of introduction of GST, there has been a reduction in rates. Washing machine, TV, which were earlier taxed at 31.5 per centnow attract 18 per cent , movie tickets above ₹100 brought down to 18 per cent.
The minister claimed that the monthly GST revenue remaining over ₹1.6-lakh crore has become the new normal since the implementation in 2017. This will further go up as tax officers are focusing on dealing with fraudsters who are adopting newer modus operandi to game the system, causing loss to the exchequer.
“GST was the signal we all welcomed in 2017 for the economic integration of new India,” said Sitharaman, adding that the tax regime has brought down taxes on goods and encouraged better movement of goods across the country.
SHARE
Copy linkEmailFacebookTwitterTelegramLinkedInWhatsAppReddit
Published on July 1, 2023
1688247248
#GST #boosted #revenue #buoyancy #States #Finance #Minister #Sitharaman