Appellate tribunal president takes charge
Finance minister Nirmala Sitharaman on Monday sought to dispel the “myth” that all GST collections are “pocketed by the Centre.”
“GST contributes significantly to state revenues – states receive 100% of SGST collected in that state, 50% of IGST (i.e. on inter-state trade), and a significant portion of CGST, that is 42%, is devolved to the states based on the Finance Commission’s recommendations,”the minister posted on X.
“GST has improved tax buoyancy from 0.72 (pre-GST) to 1.22 (2018-23). Despite compensation ending, state revenues remain buoyant at 1.15,” she said
Two significant milestones were reached in the larger GST architecture, the minister said, referring to the appointment of the president of the GST Appellate Tribunal (GSTAT) and gross GST collections crossing a landmark of Rs 2 trillion in April.
Earlier on Monday, Sitharaman administered the oath to Sanjaya Kumar Mishra as the President of GSTAT. “Mishra’s appointment marks the beginning of the operationalisation of the GSTAT, a crucial body for resolving GST-related disputes,” a release by the finance ministry said.
Finance minister Nirmala Sitharaman on Monday sought to dispel the “myth” that all GST collections are pocketed by the Centre. GST contributes significantly to state revenues – states receive 100% of SGST collected in that state, 50% of IGST (i.e. on inter-state trade),and a significant portion of CGST, that is 42%, is devolved to the states based on the Finance Commission’s recommendations.
“GST has improved tax buoyancy from 0.72 (pre-GST) to 1.22 (2018-23). Despite compensation ending, state revenues remain buoyant at 1.15,” the Finance Minister said
“Without GST, states’ revenue from subsumed taxes from 2018-19 to 2023-24 would have been Rs. 37.5 trillion. With GST, states’ actual revenue amounted to Rs. 46.56 trillion,” she said.
She further mentioned that despite the GST rate being less than the prescribed “Revenue Neutral Rate” (RNR) and COVID-19 affecting the revenues, GST collections (as a % of GDP) have now reached the levels they were before GST (both net and gross). “This demonstrates that the Centre & States, collectively, through better tax administration, are able to collect the same revenue with a lower burden on our taxpayers.” The Revenue Neutral Rate was suggested to be 15.3% but was lower at 14.4% in 2017, and it came down to 11.6% in 2019.
On the GST Council, she said that with a 75% majority vote requirement, the system assigns one-third voting power to the Centre & two-thirds to states. Out of 52 meetings, all decisions but one was reached through consensus.
GST, according to the minister, has enhanced MSME financing through tools like e-invoicing, TReDS, and the account aggregator framework. Number of registered taxpayers under GST grew to over 140 million from 6.5 million in 2017.
Also, the E-way bill system removed inter-state checkpoints, reducing logistics costs. Trucks travelled 44% more daily, and corruption at tax ‘nakas’ decreased, she said. “Consequently, domestic goods’ inter-state trade surged to 35% of GDP in FY22, up from 23.5% in FY18.”
Source:financialexpress.com