The GST Council has to make crucial decisions regarding inclusion of petroleum products and streamlining tax slabs to fortify the robustness of the GST system A Group of Ministers (GoM) set up by the GST (Goods and Services Tax) Council is currently reviewing the new tax regime with a focus on ‘simplification’ and ‘rationalisation’ as key objectives. GST is a single nationwide tax that subsumes within it more than a dozen taxes of the pre-GST era. Applied all over India, it has a provision of set-off for tax paid on inputs also known in common parlance as input tax credit (ITC). This makes the system free from the cascading effect of tax on tax besides encouraging businesses to report all...
More
Comments are closed
Category: Taxes & duties
Establishing a robust and resilient tax system
The Modi Government has successfully addressed all key aspects to ensure the strength and resilience of the tax system The robustness of the tax regime in a country can be tested by looking at its ability to engineer and sustain an accelerated growth in its GDP (gross domestic product); help the government in garnering tax revenue commensurate to growth in GDP and be ‘progressive’ in as much as it collects more taxes from those who can afford to pay more while imposing less burden on those who can’t. Look at the growth in real GDP which is GDP at constant prices. After a decline of 5.8 percent during 2020-21 caused by Corona – pandemic, growth in real GDP rebounded to...
More
Comments are closed
Aim at a tax-to-GDP ratio of 20 per cent
Buoyant tax collections hold the key to keeping up the tempo of investment in building infrastructure and funding welfare schemes In the past, invariably, the revised estimate (RE) for the relevant financial year (FY) fell short of the budget estimate (BE). During the last two years, the position has reversed with RE exceeding the BE. In fact, the trends during the first six months of the current FY point toward the Modi – government doing a hat–trick. Look at the gross tax revenue (GTR) which includes gross direct tax revenue (GDTR), GST collection, central excise duty (CED) and customs duty (CD) – net of refunds. During 2021-22, the BE for GTR was Rs 22,20,000 crore. Against this, the RE (mentioned...
More
Comments are closed
Tax reforms are yielding good results
The Income Tax Department has successfully used technology to reach out to the assesses in non-intrusive ways A major factor that has helped the Modi – government keep up the tempo of investment in building infrastructure and other development activities and continues with welfare schemes in desired measure without causing any slippage in fiscal deficit target has to do with a steep rise in tax collection. The gross tax revenue (GTR) – including total direct tax collection, proceeds from Goods and Services Tax or GST, customs and excise duty – net of refunds – surged from around Rs 21,11,000 crore during the financial year (FY) 2019-20 to Rs 30,50,000 crore during 2022-23 – an increase of about 50 per cent....
More
Comments are closed
GST is undergoing metamorphosis
There is a surge in GST collections, which has proved sceptics wrong and even surpassed the expectations of the authorities Only a couple of years ago, top officials in the Department of Revenue used to gloat over a collection of GST Rs 150,000 crore if achieved in any given month. They couldn’t even imagine that collection of Rs 150,000 crore consistently every month in a year would ever be possible. But, this happened during 2022-23, when the department garnered a total of Rs 1800,000 crore. During the current year, it is aiming at a target of Rs 2000,000 crore. A major factor behind this is an increase in nominal GDP during 2022-23 by 15.9 per cent (from a tax collection...
More
Comments are closed
Reforming the capital gains tax a smart move
It is perfectly justified if the rich class is made to pay more which, in turn, helps the Government provide services to the poor In the Finance Bill, 2023 passed by the Lok Sabha on March 24, 2023, an amendment relates to a change in the tax treatment of capital gains from non-equity or debt mutual funds (DMF). This has led to consternation in the investor fraternity including high net-worth individuals (HNIs), corporate, and so on who argue this will undermine efforts to deepen the bond market which is crucial for financing the long-term development needs of the economy. They also say such a change should have been introduced in the Union Budget. This would allow for thorough discussion in...
More
Comments are closed
Bring petroleum products under GST
The Finance Minister should proactively engage with states to speed up the process of taxing petroleum goods under the GST Finance Minister Nirmala Sitharaman has exhorted the states to give their concurrence for fixing the tax rate for five petroleum goods—crude oil, natural gas (NG), petrol, diesel, and aviation turbine fuel (ATF)—under the Goods and Services Tax (GST) to enable the GST Council to give its stamp of approval to this pending proposal. GST is a single nationwide tax with a provision for set-off tax paid on inputs. It subsumes within it more than a dozen taxes from the pre-GST era, namely central excise duty (CED), service tax, and sales tax/value added tax (VAT). Besides, a host of local taxes...
More
Comments are closed
Budget revolutionises personal income tax
The new personal income tax regime will spur economic growth as it leaves more cash in the hands for people In Budget 2023-24, Finance Minister Nirmala Sitharaman has made some radical changes in the structure of personal income tax (PIT). To get a sense, let us first take a look at what she did in her Budget 2020-21. Then, Sitharaman had announced the Modi Government’s intention to move towards a regime that was simple, free from a plethora of exemptions and deductions, and reduced the tax liability of assesses, thereby leaving higher disposable income in their hands. From the perspective of the economy, the idea was to give a boost to aggregate demand and drive growth. Under the old regime...
More
Comments are closed
India must tax MNCs for revenues here
Ideally, the source country from where an offshore firm is deriving its income should have sole right to collect tax Over the years, an increasing share of the income generated globally has gone towards boosting the profits. The proportion of corporate profit in global GDP (gross domestic product) went up from 14.5 per cent during 1975 to 16.2 per cent in 2000 and further to 20 per cent during 2019. The growth in profit, in turn, was driven largely by multinational companies (MNCs) – companies which operate in several jurisdictions. Their share in corporate profit increased from four per cent during 1975 to 18 per cent during 2019. Even more disconcerting is the fact that such companies didn’t pay taxes...
More
Comments are closed
Tax surge a cushion to bear hit from subsidies
But tax collection buoyancy has been slowing down since the last year, which calls for tightening slippages In the past, a shortfall in tax receipts of the Union government vis-à-vis the budget estimate (BE) and excess of expenditure over BE led to high fiscal deficit (FD) year after year. To rein in FD, it often took recourse to non-tax receipts such as dividend from public sector undertakings (PSUs), proceeds from selling government shares in one PSU to another, transfer of surplus by the Reserve Bank of India (RBI), proceeds from sale of spectrum for telecom services, etc. This was unsustainable as reliance on non-tax receipts is unreliable. For instance, dividend from a PSU depends on a host of factors specific...
More
Comments are closed