After long await, Goods and Services Tax (GST) finally came into being from July 1, 2017. The objective of bringing GST was aimed at removal of gamut of indirect taxes such as VAT, Sales Tax, Excise Duty, Octroi etc. which were creating hurdles in the path of smooth sailing of business activities. The need of having “one tax for one nation” had been felt for long time. But, because of lack of political consensus, introduction of GST took more than a decade. The government has done its level best to educate on the likely benefits of GST for the economy (in general) and individuals (in particular) which would be deriving from one nation one tax policy.
In order to remove doubts with regard to effective implementation of policy, the government came out with GSTN (GST network) which provides reliable, efficient and robust IT backbone for the smooth functioning of GST regime enabling entire nation as one market with minimum indirect tax compliance cost.
The initiatives taken by the government seems to be yielding good result. According to government data of July month, GST collection at Rs. 92,283 crore has been robust in the sense that it has exceeded estimate of Rs. 91,000 crore from Ministry of Finance. Another important factor to consider is that only 64.42% of the total tax payer base has transitioned to new GST regime. Even with only 64.42% of the tax payer base, achieving this target of Rs.92,283 crore is a highly commendable feat.
Had the remaining 35.58% of tax payers also transitioned and paid GST, it would have far exceeded government’s estimations. However, total tax collections include input credit as well. At this stage we are not sure how much amount will go towards input credit. Nonetheless, July 2017 GST tax collection is very impressive number. Since, July is just the first month since GST implementation, people at large are still not very familiar with tax structures and e-filing that too at three different dates in a month. Going forward, government may simplify the whole structure of GST and complex e-filing procedures which may have multiplier impact on total tax collection. Tax collection of current high order, which is expected to go further high, would have very positive bearing on containing fiscal deficit which will ultimately be providing structural strength to the economy.
With regard to total tax revenue of Rs. 92,283 crore collected under GST can further be sub-categorized as revenue from CGST at Rs. 14,894 crore (16.1% of total GST collection), SGST at Rs. 22,722 crore (24.6%), IGST at Rs. 47,469 crore (51.4%) (IGST figure includes Rs. 20,964 from imports) and Cess at Rs. 7,198 crore (7.8%) (which includes compensation Cess from imports). Revenue from IGST has to be distributed between Centre and States. This distribution will be based on the cross-utilization report to be received from GSTN, a technology backbone for GST in India.
With regard to registrations, total 72.33 lakh taxpayers have been migrated to GST network wherein 58.53 lakh taxpayers have completely migrated to the GSTN and 13.80 lakh taxpayers are yet to complete their procedural formalities to migrate to the GSTN. Along with this, the number of new taxpayers has been registered with the GSTN is 18.83 lakh till August 29, 2017 which reflects positive sign to boost tax revenue in years to come.
Eventually, it is too early to reach at conclusion on numbers because it is the very first month of GST collection; and to arrive at logical conclusion, we will have to wait for figures in the forthcoming months. Having said that, one has to agree that it is Bumper Beginning for GST implementation in India.