Ex­pand GST Base, Re­duce Bur­den of Com­pli­ance: Sur­vey

Doc­u­ment crit­i­cises govt de­ci­sion to keep health and ed­u­ca­tion com­pletely out of GST

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New Delhi: The mid-year Eco­nomic Sur­vey has called for in­clud­ing elec­tric­ity, al­co­hol, real es­tate, health and ed­u­ca­tion, in the frame­work of goods and ser­vices tax to ex­pand the base of the newly im­ple­mented in­di­rect tax.

“Bring­ing elec­tric­ity into GST frame­work would im­prove com­pet­i­tive­ness of In­dian in­dus­try be­cause taxes on power get em­bed­ded in man­u­fac­tur­ers’ costs, and can be claimed back as in­put tax credit,” said the Eco­nomic Sur­vey Vol­ume-2, au­thored by chief eco­nomic ad­viser Arvind Subramanian. In­clu­sion of land and real es­tate, and al­co­hol in GST will im­prove trans­parency and re­duce cor­rup­tion.

Crit­i­cis­ing the de­ci­sion to keep health and ed­u­ca­tion com­pletely out of GST, the sur­vey said the move is “in­con­sis­tent with eq­uity” as th­ese ser­vices are con­sumed dis­pro­por­tion­ately by the rich.

It also called for in­creas­ing tax on gold and jew­ellery from the cur­rent 3%, say­ing it is an­other seg­ment “dis­pro­por­tion­ately con­sumed by the very rich”.

The sur­vey said there are “early signs of tax base ex­pan­sion”. In June and July, 6.6 lakh new agents pre­vi­ously out­side the tax net have sought GST reg­is­tra­tion, it said. This is ex­pected to rise con­sis­tent- VAT rates across 29 states re­duced to 6 na­tional rates

as one set of forms once a month

clause likely to be used spar­ingly of tax base ex­pan­sion; 6.6 lakh agents sought reg­is­tra­tion

di­rect tax mopup by pro­vid­ing more info

ly as the in­cen­tives for for­mal­i­sa­tion in­crease. “Pre­lim­i­nary es­ti­mates point to po­ten­tially large in­creases in the tax base as a con­se­quence,” the sur­vey said.

Rolled out on July 1, GST has brought in uni­for­mity or the prin­ci­ple of ‘one good, one tax’ all over the coun­try. “So rel­a­tive to the past, there is now uni­for­mity rather than mul­ti­plic­ity as well as con­sid­er­ably less com­plex­ity,” the sur­vey said.


of goods, fi­nan­cial in­clu­sion

The sur­vey also made a case for re­duc­ing GST com­pli­ance bur­den and asked the gov­ern­ment for more cen­tralised pro­ce­dures. In­creased com­pli­ance re­quire­ments, it said, will be faced only by a small num­ber of agents with a pan-In­dia pres­ence whose abil­ity to com­ply will be com­men­su­rately greater.

Re­fer­ring to dis­cus­sions in the GST Coun­cil, the sur­vey said that at­tempts were made to pre­serve the pre­vi­ous, sim­pler sys­tem. “Go­ing for­ward, there is scope for more cen­tralised pro­ce­dures to min­imise the com­pli­ance bur­den,” it said, and asked the GST Coun­cil to take up th­ese chal­lenges in the months ahead to take In­dia from a good GST to a bet­ter GST.


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