NEW DELHI: The goods and services tax (GST) has enhanced tax buoyancy to 1.22 from 0.72 pre-GST, leading to increased revenue for states post the five-year compensation period, finance minister Nirmala Sitharaman tweeted on Monday.
“GST has improved tax buoyancy from 0.72 (pre-GST) to 1.22 (2018-23). Despite compensation ending, state revenues remain buoyant at 1.15. Without GST, states’ revenue from subsumed taxes from FY19 to FY24 would have been Rs 37.5 lakh crore. With GST, states’ actual revenue amounted to Rs 46.56 lakh crore,” Sitharaman said.
Even with the GST rate below the revenue neutral rate and COVID-19 impacting revenues, GST collections as a percentage of GDP have returned to pre-GST levels, showcasing that the Centre and states, by improving tax administration, can generate similar revenue with reduced taxpayer burden, the Minister stated.
“It is a myth that all GST collections are pocketed by the Centre. GST contributes significantly to state revenues. States receive 100% of SGST collected in that state, nearly 50% of IGST (i.e. on inter-state trade). A significant portion of CGST, i.e. 42% is devolved to the states based on the Finance Commission’s recommendations,” Sitharaman added.
The minister highlighted that reflecting a pro-poor stance, the effective weighted average GST rate has steadily decreased since 2017. Despite a suggested Revenue Neutral Rate of 15.3%, the actual rate was 14.4% in 2017, dropping further to 11.6% in 2019.
“GST lowered taxes on many essential items compared to pre-GST rates. Common items like hair oil and soaps saw tax cut from 28% to 18%. Electrical appliances taxed at 12% v/s 31.5% before. Movie tickets were taxed lower, too. Further tax rate rationalization has been done since 2017. National Anti-profiteering Authority ensured that companies passed the benefits to the consumers,” she wrote. GST consolidated 17 taxes and 13 cesses into a simplified 5-tier structure, streamlining the tax system.
Sanjaya Mishra first president of GSTAT
NEW DELHI: Finance Minister Nirmala Sitharaman on Monday administered the oath of Justice (Retd) Sanjaya Kumar Mishra as the inaugural President of the GST Appellate Tribunal (GSTAT), commencing the functionality of the tribunal. Mishra’s appointment signifies the commencement of operations for the GSTAT, a vital entity for settling GST-related disputes. “Union Minister for Finance and Corporate Affairs Nirmala Sitharaman administered the oath of integrity and secrecy to Justice (Retd.) Sanjaya Kumar Mishra as the President of the GST Appellate Tribunal (GSTAT), in New Delhi, today,” the government statement said. Mishra, a former Chief Justice of the Jharkhand HC, was selected by a Search-cum-Selection Committee led by the Chief Justice of India. ENS