MUMBAI: Indirect tax collections may be subdued thanks to the goods and services tax (GST), but the historical tax reform is finally bringing home a ‘feast of findings,’ according to the Economic Survey.
To give you a flavour, since the GST rollout last July, there has been a 50 per cent rise in indirect taxpayers. Over 17 lakh voluntarily registered though they are below the threshold. Our exports have an unusual trend — large firms account for smaller share than comparable countries — internal trade is about 60 per cent of GDP, bigger than previous estimates. And, there’s a strong correlation between export performance and states’ standard of living.
GST is enlarging the understanding of our economy and going by the indirect tax data set, formal sector - firms either offering a social security or registered under GST - comprise 13 per cent of the total firms in the private non-agriculture sector, but account for over 93 per cent of the total turnover.
Of this, a mere 0.6 per cent can be termed ‘hardcore’ formal sector, yet accounting for 38 per cent of total turnover, 87 per cent of exports, and 63 per cent of the GST liability. Firms below the threshold account for 32 per cent of total firms and less than 1 per cent of total turnover and a share in tax liability. Large firms, with an annual turnover above Rs 100 crore, accounting for less than 1 per cent of firms but 66 per cent of turnover and 54 per cent of total tax liability.
In contrast, 87 per cent of the firms, accounting for 21 per cent of the total turnover are informal, while 12 per cent of firms comprise 41 per cent of the turnover, 13 per cent of exports, and 37 per cent of tax liabilities (in the tax net but no social security).
Meanwhile, for the first time, the Survey used GST data to list state-wise distribution of international exports and found that the top five states - Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana - account for 70 per cent of India’s exports. Maharashtra has the highest share of taxpayer base at 16 per cent, followed by Tamil Nadu at 10 per cent, Karnataka 9 per cent.