The goods and services tax popularly called GST was launched across India, on the midnight of June 30th in a grand function inside Parliament's Central Hall. The Prime Minister Narendra Modi has called GST as Good and Simple Tax. GST could be India's biggest tax reform ever. In a watershed moment, then President Pranab Mukerjee and Prime Minister Narendra Modi pressed a buzzer to launch Goods and Services Tax in India.
So why is GST such a great move? It increases the tax base which increases the Government's ability to spend on welfare and development activities. GST removes the cascading tax effect called tax on tax. In simple words today we are paying multiple taxes such as excise duty, custom duty, value added tax, octroi, service tax and so on. Now, GST will replace all these taxes with a single tax.
These are some of the benefits of GST. There would be reduction in tax evasion, an increase in GDP and an increase in revenue.
GST Collections have exceeded the target. Let's take a look at them. Want to know more on tax planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.
Yes, the collections under the goods and services tax GST, for the month of July was INR 92,283 Crores. The Government had set a target of INR 91,000 Crores.
The collections under GST for the month of July, the very first month of its rollout have well exceeded the Union and State Government's target. The Government earned INR 92,283 Crores against a set target of INR 91,000 Crores.
Now, only 3.84 Million returns have been filed. This is just 64% of the total. Imagine the amount when the rest of the collections come in.
The target for GST collections was set at INR 91,000 Crores. The collections of INR 92,283 Crore, easily exceeded the set target, in spite of a third of tax payers, yet to submit their returns and tender tax dues. Out of the INR 92,283 Crores, about INR 14,894 Crores has come in from Central GST, about INR 22,722 Crores has come from State GST, Integrated GST accounts for INR 47,469 Crores while compensation cess amounts to INR 7,198 Crores.
Products which are considered luxury in nature or polluting fuels, are levied a cess over and above the 28% tax rate, called the compensation cess. The cess is aimed at compensating states for any revenue shortfall caused by the switch to the new indirect tax regime.
The achievement of this target of INR 91,000 Crores is of great significance. It means taxes are more difficult to evade. It also shows that the transition to GST does not mean much of a revenue loss.
However these numbers need to be taken with a pinch of salt. This was the first month of the GST and there was a huge amount of sell off which happened in the month of June in anticipation of GST. Then there are input credits. Input credit means at the time of paying tax on output, you can reduce the tax you have already paid on inputs. So input credits also need to be taken into account.
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