Roadmap for Answer Writing
1. Introduction
- Objective: Introduce the Goods and Services Tax (GST) and its significance in India.
- Key Point: Emphasize the goal of creating a unified tax structure to improve ease of doing business and enhance compliance.
2. Indirect Taxes Subsided in GST
A. Central Level Taxes
- List of Taxes:
- Central Excise Duty
- Additional Excise Duty
- Service Tax
- Countervailing Duty
- Special Additional Duty of Customs
B. State Level Taxes
- List of Taxes:
- State Value Added Tax (VAT)/Sales Tax
- Entertainment Tax (excluding local body taxes)
- Central Sales Tax (levied by the Centre and collected by States)
- Octroi and Entry Tax
- Purchase Tax
- Luxury Tax
- Taxes on Lottery, Betting, and Gambling
3. Revenue Implications of GST Since July 2017
A. Revenue Growth
- Fact: GST revenue collections increased from an average of ₹0.89 lakh crores in 2017-18 to ₹1.5 lakh crores in 2022-23 (Source: Ministry of Finance).
B. Tax Base Expansion
- Fact: The registration of businesses rose from 6.4 million under the old regime to 11.2 million under GST, aided by the e-way bill system (Source: GST Council).
C. Reduction in Tax Evasion
- Fact: The destination-based nature of GST has enhanced transparency and made tax evasion more difficult (Source: Economic Survey).
D. State Revenue Disparities
- Observation: While overall GST collections have been rising, state revenues have shown volatility, raising concerns about equitable distribution (Source: GST Council).
E. Compensation Issues
- Fact: States are guaranteed compensation for revenue shortfalls for five years, but concerns exist regarding the sustainability of this measure (Source: Ministry of Finance).
4. Conclusion
- Summary: Recap the significance of GST in transforming the taxation landscape in India and its impact on revenue generation.
- Call to Action: Emphasize the need for ongoing evaluation and adjustments to the GST framework to ensure its effectiveness and sustainability.
Model Answer
Introduction
The Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based indirect tax implemented in India on July 1, 2017. It aimed to unify the tax structure under a single regime, enhancing transparency and compliance while reducing the tax burden on consumers.
Indirect Taxes Subsided in GST
GST has subsumed several indirect taxes previously levied by both the central and state governments:
Central Level Taxes
State Level Taxes
Revenue Implications of GST Since July 2017
The introduction of GST has had significant revenue implications:
Conclusion
GST represents a significant reform in India’s tax landscape, aiming to eliminate the cascading effect of taxes and streamline compliance. Despite challenges, it has the potential to drive economic growth and enhance employment generation in the long run.
Indirect Taxes Subsumered in Goods and Services Tax (GST)
The Goods and Services Tax (GST) introduced in India on July 1, 2017, subsumed several indirect taxes, streamlining the tax system. The major indirect taxes subsumed under GST include:
Revenue Implications of GST
The introduction of GST has had mixed revenue implications:
Overall, GST has streamlined the tax system and improved efficiency, but its revenue impact has evolved as the system matures and compliance improves.