The panel’s reference to structural alterations to GST comes in the imprint of plans by the central government to merge the 12% and 18% GST slabs, an idea that has to create support among some states. In this article, we will discuss the Panel recommends structural changes to boost GST revenues.
Panel recommends structural changes to boost GST revenues
The GST panel’s citation to structural changes to GST arrives in the wake of plans by the central government to merge the 12% and 18% GST slabs, an idea that has organized support among some states.
The government requires to make structural changes in the goods and services tax GST administration and step up compliance to stimulate revenues, given the need to make up for the gap in states’ GST revenue receipts, a parliamentary panel has notified the finance ministry.
Due to the Covid-19, several states noted revenue losses, impacting GST collections—a development that warrants criteria to improve compliance, the parliamentary standing committee on finance chaired by Jayant Sinha, the former minister of state for finance.
In light of the prevailing economic scenario, the committee would, therefore, requested the government to inaugurate all possible measures, both structural and enforcement related, to increase GST collections, which has in recent months shown an upward trend.
Further Notification by Finance Ministry
Further, the panel’s reference to structural changes to GST comes in the wake of plans by the central government to merge the 12% and 18% GST slabs, an idea that has organized support among some states. The indication is to address the attrition of indirect tax incidence on transactions following the GST rollout. The Fifteenth Finance Commission (FFC) had also instructed the government to rebuild the rate neutrality of GST.
Although some transformative modifications have been brought in to step up tax receipts, India’s tax buoyancy has not been proportionate to the expansion in income and wealth,
In developed countries, the tax to gross domestic product (GDP) ratio is approximately 25-26%. In India, the bulk of the national income is contributed by those who cannot afford to pay taxes, which illustrates why India’s tax to GDP ratio hovers around 10%.“Given the restrictions in raising tax rates, including its counter-productive economic impact, the committee would expect higher revenues to be produced through tighter enforcement and higher compliance.
If you want any other guidance related to GST Registration or GST Return filing, please feel free to talk to our business advisors at 8881-069-069.
Download E-Startup Mobile App and Never miss the freshest updates narrating to your business.