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Introduction

The Goods and service tax (GST) is a vast concept that simplifies

The gaint tax structure by supporting and enhacing the economy

Growth of country. GST is a comprehensive tax levy on manufacturing,

Sale and consumption (one Hundred and Twenty-second Amendment) Bill,

2014, initiates a value added Tax to be implemented on a national level in india.

GST will be an indirect tax at all the stages of production to bring about uniformity in the
system.

Under this system, the consumer pays the final tax but an efficent input tax credit system

ensures that there is no cascading of taxes – tax on tax paid on input that go into
manufacture of goods

In order to avoid the payment of multiple taxes such as excise duty and service tax at

Central level and VAT at the state level, GST would unify these taxes and create a uniform market

throughout the country. Integration of various taxes into a GST system will bring about an
effective cross –utilization of credits. The current system taxes production, whereas the GST
will aim to tax consumption

Expert have enlisted the benefits of GST as under:

. it would subsume all indirect taxes at the center and the state level

. data from the GST can help unveil some long-elusive and basic facts about the indian

economy. Some exciting new finding include

. New data on the international export of state suggests a strong correlation between
Export performanc and state standard of living

. yet almost unnoticed is its one enormous benefit: it will create a vast repository

Of information, which will enlarge and surely alter our understanding of india economy

. internal trade is about 60 percent of , even greater than currently believed.

Formality defined in terms of social security provision yield an estimate of formal sector payroll

Of about 31 percent of the non-agriculture work force; formality defined in tems of being part
of the net GST suggests a formal sector payroll of 53 percent

. similarly, the size of the formal sector (defined here as being either in the social security

Or GST net ) is 13 percent of total firms in the private non-agriculture sector but 93 percent
of their turnover.

TAXPAYERS
. The profit of new files is interesting.of their total turnover, business-to-consumer(B2C)

Transactions account for only 17 percent of the total. The bulk of transaction are business-to-
business(B2B) export, which account for 30-34 percent apiece
. one of the many benefit of the GST was the voluntary compliance it would elicit. A Few the

voluntary compliance it would elict. A Few number highlight this phenomenon. There are
about 1.7 million registrants Who were below the threshold limit (and hence not obliged to
register) who nevertheless chose to do so. Indeed, out of of the total estimated 71 million non-
agriculture enterprises, it is estimated that around 13 percent

Table 1.Number of indirect Tax Registrations pre-post-GST


GST Registrants where GST Type GST Registration
Registrant
Total new Old Excise service VAT New Composition Regular
All 9.8 3.4 6.4 .01 .06 5.8 3.4 1.6 8.2
India

Note: A company can have multiple registration if the company operates across
the state

Source: survey calculations based on GST data

Table 2.Estimated Turnover and its Type of the New filers


Under GST
B2B B2C Export NIL Total

34.0% 16.8% 29.8% 19.4% 100.0%

Note: NIL category includes supplies that are outside the scope of the GST such as
protroleum, health,education,and electricity

Source : survey calculation based on GST data


. Maharastra UP, Tamil Nadu and Gujarat are the states with greatest number

of GST registrants UP and West Bengal have seen large increases in the number of
tax registrants compared to the old tax regime

TAX BASE AND ITS SPATIAL DISTRIBUTION

. Much of the Discussion in the run –up to the GST centered on the size of the tax base and

its im.lications for the Revenue Neutral Rate (RNR). THE RNR Committee had estimated a base
of Rs. 65.8 lakh crore

. Current Data suggest that the GST tax base (excluding exports) is Rs 65-70 lakh crore.

Broadly similar to these two previous estimates based on the average collections in that first
Few months,the implied weighted average collection rate (incidence) is about 15.6 percent.
So, as estimated by the RNR committee, the single tax rate that would preserve revenue
neutrality is between 15 to 16 percent

. The top state-wise share of the total GST bas base. The top states are Maharastra

(16 percent), Tamil Nadu (10 percent), Karnataka (9 percent), Uttar pradesh (7 percent), and
Gujarat (6 percent)

SIZE DISTRIBUTION OF INTER-FIRM TRANSACTION


Knowing the nature of transaction between firms is critical to formulating policy the size of the
firm. All firms are placed in five categories based on their annual turnover:
Transaction type
B2B B2C Exports Nil Total Share of Share in
filed Tax
Returns Liability
Below- 0.2% 0.2% 0.0% 0.0% 0.4% 32.2% 0.9%
Threshold
Composition 1.2% 1.1% 0.0% 0.1% 2.4% 36.0% 4.4%
SME 3.8% 2.3% 0.1% 0.5% 6.8% 22.0% 10.5%
Medium 15.5% 4.3% 1.5% 2.8% 24.1% 9.2% 29.5%
Large 36.5% 4.9% 7.7% 17.1% 66.2% 0.6% 54.4%
Total 57.3% 12.8% 9.4% 20.5% 100.0% 100% 100%

. Below-composition limit, Rs20-100 lakh (The current upper limit of the composition scheme
is Rs 150 lakh);

. Small and micro enterproses (SME), Rs 1-5 crore;


. medium, rs 5-100 crore; and
. large firms above Rs. 100 crore.
. The small B2C firms want to be part of the GST because they buy from large enterprises.

In fact, 68 percent of the their purchase (1.7/2.5, from the first column) are from medium or
large registered enterprises giving them a powerful incentive to register, so they could secure
input tax credit on these purchase.
Cross-table of supplier and purchaser by Turnover Group
Purchaser turnover category
Threshold Below SME Medium Large Total
composition
SUPPLIER Threshold 0.0% 0.1% 0.1% 0.1% 0.1% 0.3%
Turnover Below 0.2% 0.4% 0.5% 0.6% 0.4% 2.2%
Category composition
SME 0.5% 1.0% 1.6% 2.2% 1.3% 6.7%
Medium 1.0% 2.0% 4.8% 10.9% 8.3% 27.0%
Large 0.7% 1.1% 4.1% 17.3% 40.6% 63.8%
Total 2.5% 4.6% 11.1% 31.1% 50.7% 100.0%

INTERNATIONAL TRADEV INTER-STATE TRADE AND ECONOMIC


PROSPERITY

. Last year’s survey provided the first estimated of inter- state trade data in india based on tax
data. Those estimates had to be backed out from payment of inter- state trade and its many
related dimension

. Even more exciting is that for the first time in india’s history it is possible to know the state-
wise distribution of international export of goods and exports of goods and service. Five state –
Maharastra, GUjrat, Karnataka, Tamil Nadu , Telangana – in that order account for 70% of
india’s exports
Share of state in Export of Goods and service

State % share cumnlative


MH 22.3% 22.3%

GJ 17.2% 39.5%

KA 12.7% 52.3%

TN 11.5% 63.8%

TE 6.4% 70.1%

HR 4.9% 75.0%

UP 4.8% 79.8%

WE 3.2% 83.0%

AP 2.8% 85.8%

OD 2.0% 87.8%

DEL 1.9% 89.7%

RJ 1.8% 91.5%

KE 1.7% 93.2%

PUN 1.7% 94.8%

MP 1.3% 96.1%

GO 0.9% 97.0%
Last year survey had estimated that estimated that india’s inter- state trade in good was
between 30 and 50 percent of GDP, a relatively, high number compared to other countrises
GST data suggests that india’s internal trade in goods and services ( excludes non- GST goods
service) is actually even higher: about 60 percent of GDP

. The five largest exporting state are Maharastra Gujarat, Haryana Tamil nadu and Karnataka
. The five largest importing state are maharastra, tamil Nadu, Uttar pradesh, Karnataka and
Gujarat;

. The state with the largest internal trade suroluse are Gujarat, Haryana, Maharastra, Odisha
and Tamil Nadu