The indirect tax system in India is extremely complex. It has long been felt that the complexity of tax structure and the general legal framework dampens entrepreneurship and hinders growth of businesses. India, in spite of being a single country, faces internal barriers to interstate trade, commerce, and business because of prevailing multiplicity of tax structures. While the implementation of VAT helped in ironing out major tax rate differences yet the need for structural reforms continued to be felt. VAT implementation also helped in preparing the groundwork that is essential for bringing out the next level of tax reforms viz. the Goods and Services Tax.
This article briefly describes the State Wise Collection of GST, its Essential features of GST, & Advantages of GST.
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What is GST?
GST is the most ambitious and remarkable indirect tax reform in India’s post-Independence history. Its objective is to levy a single national uniform tax across India on all goods and services. GST has replaced a number of Central and State taxes, made India more of a national integrated market, and brought more producers into the tax net. By improving efficiency, it can add substantially to growth as well as government finances. Implementing a new tax, encompassing both goods and services, by the Centre and the States in a large and complex federal system, is perhaps unprecedented in modern global tax history. GST is a tax on goods and services with comprehensive and continuous chain of set-off benefits up to the retailer level. It is essentially a tax only on value addition at each stage, and a supplier at each stage is permitted to set-off, through a tax credit mechanism, the GST paid on the purchase of goods and services. Ultimately, the burden of GST is borne by the end-user (i.e. final consumer) of the commodity/service
Essential features of GST
It is a destination-based tax on consumption of goods and services. It means that the tax would accrue to the taxing authority which has jurisdiction over the place of consumption (often called ‘place of supply’).
It is levied at all stages till consumption. It means that GST would be levied at all trading, manufacturing, storage, distribution, wholesale/retail stages up to the final consumption but credit of taxes paid at previous stages would be available as setoff. Thus, the concept of taxing merely the value additions is retained in GST and there would be no cascading effect of taxes. The final burden of tax will have to be borne by the final consumer
Advantages of GST
- GST is a transparent tax and also reduces the number of indirect taxes.
- GST will not be a cost to registered retailers therefore there will be no hidden taxes and the cost of doing business will be lower.
- Benefit people as prices will come down which in turn will help companies as consumption will increase.
- There is no doubt that in the production and distribution of goods, services are increasingly used or consumed and vice versa.
- Separate taxes for goods and services, which is the present taxation system, requires division of transaction values into value of goods and services for taxation, leading to greater complications, administration, including compliances costs.
- In the GST system, when all the taxes are integrated, it would make possible the taxation burden to be split equitably between manufacturing and services.
- GST will be levied only at the final destination of consumption based on the VAT principle and not at various points (from manufacturing to retail outlets). This will help in removing economic distortions and bring about development of a common national market.
- GST will also help to build a transparent and corruption-free tax administration.
- Presently, a tax is levied on when a finished product moves out from a factory, which is paid by the manufacturer, and it is again levied at the retail outlet when sold.
- GST is backed by the GSTN, which is a fully integrated tax platform to deal with all aspects of GST.
State-wise GST collection
The Goods and Services Tax (GST) collection in India crossed the Rs. 1 lakh crore mark for the fifth consecutive month in July 2021. The total gross GST revenue collected in the month of July 2021 was Rs. 1,16,393 crores. In the subsequent months, the GST collection remained above the Rs. 1 lakh crore mark. Let’s take a look at the state-wise GST collection (other than imports) from July 2021 to July 2022
Maharashtra
Maharashtra is the highest GST revenue collecting state in India. From July 2021 to July 2022, the state collected a total of Rs. 1,08,944 crores in GST revenue. In July 2021, the state collected Rs. 14,299 crores in GST revenue.
Karnataka
Karnataka is the second-highest GST revenue collecting state in India. From July 2021 to July 2022, the state collected a total of Rs. 60,925 crores in GST revenue. In July 2021, the state collected Rs. 8,336 crores in GST revenue.
Tamil Nadu
Tamil Nadu is the third-highest GST revenue collecting state in India. From July 2021 to July 2022, the state collected a total of Rs. 55,726 crores in GST revenue. In July 2021, the state collected Rs. 7,928 crores in GST revenue.
Uttar Pradesh
Uttar Pradesh is the fourth-highest GST revenue collecting state in India. From July 2021 to July 2022, the state collected a total of Rs. 49,261 crores in GST revenue. In July 2021, the state collected Rs. 6,996 crores in GST revenue.
Gujarat
Gujarat is the fifth-highest GST revenue collecting state in India. From July 2021 to July 2022, the state collected a total of Rs. 47,143 crores in GST revenue. In July 2021, the state collected Rs. 6,301 crores in GST revenue.
Conclusion
The goods and services tax (GST) has been presented as the major tax reform for the Indian economy. It is therefore of importance to examine the impact it has had on the economy, as well as on the citizens of the economy. Goods and Service Tax (GST) is a broad based and single comprehensive tax levied on goods and services consumed in an economy. GST is levied at every stage of the production-distribution chain with applicable set-offs in respect of the tax remitted at a previous stage. It is a tax on final consumption. In simple terms, GST may be defined as a tax on goods and services, in which at the time of sale of goods or providing the services, the seller or service provider may claim the input credit of tax which he has paid while purchasing the goods or procuring the service.
