GST implementation quite successful
Within one year of GST launch, 48 lakh enterprises have been added as compared with 66 lakh enterprises registered in all these years since Independence. This may be attributed to the simple procedures adopted under GST.
An analysis in the ‘Economic Survey’ explains the reason for this phenomenal increase in indirect tax payers. Majority of the new registrants come from the business-to-business (B2B) segment and small enterprises who have voluntarily chosen to register — although they could have opted out because of their turnover — as they can seek to get the benefit of input tax credit. This became possible because GST has integrated the entire value chain, from raw material to retail.
According to the Economic Survey, there is a 50 per cent increase in unique indirect tax payers under GST compared with the pre-GST system. This is a landmark achievement and proof that India is fast transforming from a tax non-compliant society to a tax-compliant one.
The initial concerns were of course born out of the roller-coaster nature of GST collections. But with Rs.1 lakh crore in April 2018, those concerns have been finally put to rest.
Most of the States have participated in this revenue gain and have almost retained their pre-GST revenue shares in the total tax revenue. States can improve their revenue collection if they build capacity in their commercial tax departments by using advanced data analytics to identify leakages.
With GST, the intimidating task of complying with and paying around 17 different taxes has now been reduced to a State GST and a Central GST. This effect of the GST reform is a big deal for all businesses and consumers, especially small businesses for whom the cost and effort of compliance with complex and often corruption ridden inter-State trade was intimidating and discouraging.
As Max Weber puts it, “Reform is the slow boring of hard boards.” Most governments pushing reforms end up bearing the political costs upfront and early, with the benefits evolving over the medium term. That requires a certain determination and belief in the political leadership and Modi has certainly delivered that despite all the petty political potshots of ‘Gabbar Singh Tax’, etc.
