According to a recent report by the National Institute of Public Finance and Policy (NIPFP), the Centre has received a significant boost in tax revenue post the implementation of Goods and Services Tax (GST). However, the report also points out that states are yet to see a similar improvement.
The GST was implemented on 1st July 2017, with the aim of creating a uniform tax structure across the country. It replaced multiple indirect taxes that were levied by the central and state governments. The introduction of GST was expected to streamline tax collection, reduce tax evasion, and boost revenue for both the central and state governments.
The NIPFP report suggests that the Centre's revenue collections have seen a considerable increase since the implementation of GST. The report indicates that the Centre's gross tax revenue has increased by 12.2% in the post-GST period, as compared to the pre-GST period. Additionally, the report states that the GST has helped in reducing the cascading effect of taxes, thereby resulting in lower tax rates for consumers.
However, the report highlights that the states are yet to witness a similar boost in revenue. The report states that the growth in states' gross tax revenue has been lower at 7.4% in the post-GST period, as compared to the pre-GST period. This is primarily due to the fact that states have faced several challenges in implementing GST, including issues related to IT infrastructure, compliance, and revenue-sharing between the Centre and states.
The report also suggests that the revenue shortfall faced by the states has resulted in an increase in their borrowing, which has added to their fiscal burden. This, in turn, has impacted the states' ability to invest in development projects and infrastructure.
In conclusion, the NIPFP report highlights that while the Centre has seen a significant boost in tax revenue post-GST, states are yet to see a similar improvement. The report suggests that the Centre needs to work closely with states to address the issues faced by them in implementing GST, and to ensure that the revenue-sharing mechanism is transparent and equitable. This will help in creating a uniform tax structure across the country, and in boosting revenue for both the Centre and states, thereby promoting economic growth and development.
For any further doubt on matters related to GST, feel free to contact ASC Group.
Source: Money Control
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