NEW DELHI: Chief economic adviser Arvind Subramanianon Monday said India may be headed to a single rate for goods and services tax (GST) over the next three-tofive years, but called for further rationalisation of the indirect tax regime that kicked in last July.
The comments from the government's chief economist came after the Economic Survey authored by him and his team suggested that GST had got off to a good start, with growth in collections estimated at 12 per cent. "In the initial phase of such a large disruptive change, this performance is noteworthy. The GST promises to be a buoyant source of future revenues," the document tabled in Parliament said.
Belying "confusion and anxiety" surrounding GST collections, the Survey said the uncertainty will be removed once the system stabilises later this year.
"But the provisional assessment is this: Revenue collection under the GST is doing well, surprisingly so, for such a transformational reform," it said, adding, taxes that GST has subsumed had fetched Rs 9.7 lakh crore to the exchequer in 2016-17.
Although policy makers were initially upbeat, collections dipped for a few months and caused some anxiety before the tide turned in January and provided some comfort. Subramanian acknowledged that there are too many rates currently, which need to be corrected but drew satisfaction from the fact that the current average rate of 15.6 per cent was in line with the 15-16 per cent revenue neutral rate recommended by a panel headed by him.
The Survey noted that base of indirect taxpayer has increased by over 50 per cent, with 34 lakh businesses coming into the tax net, led by voluntary registrations, especially by small enterprises that buy from large enterprises and want to avail themselves of input tax credits. Nearly 17 lakh businesses registered under GST, despite turnover being below the threshold limit of Rs 20 lakh.
Data mapped by the government showed Maharashtra, UP, Tamil Nadu and Gujarat have the largest base, with UP and West Bengal seeing the maximum jump in the number of new taxpayers. The worrying trend was that nearly 47 per cent of the taxes were collected from five states — Maharashtra (16 per cent), Tamil Nadu (10 per cent), Karnataka (9 per cent), Uttar Pradesh (7 per cent), and Gujarat (6 per cent). "The distribution of GST base among states is closely linked to size of their economies, allaying fears of major producing states that the shift to the new system would undermine their tax collections," government's economic report card said.
Source : https://timesofindia.indiatimes.com/business/india-business/single-rate-gst-regime-may-be-a-reality-in-3-5-years/articleshow/62707103.cms