The chapter 2 of the Economic Survey is titled- “A New, Exciting Bird’s Eye View of the Indian Economy Through the GST.”
Before reading further you may read these articles on GST by Economyria-
- GST explained
- The final structure of GST
- Changes made by the GST council in the 22nd meeting
- How to file GST returns?
- Impact of GST on exports- working capital stuck as GST delayed
The GST is supposed to bring many advantages to the economy. Some of them are-
- creation of one single market
- expanding the tax base
- co-operative federalism
This chapter has focussed on one enormous benefit of GST that has gone unnoticed.
GST will create a vast repository of information, which will enlarge and alter our understanding of India’s economy. In other words, data gathered from the GST will help in analysing and understanding the economy better.
This year’s Economic survey provides direct data (based on GST returns) on inter-state trade in India. Also, for the first time in India’s history, it has been possible to know the state-wise distribution of international exports of goods and services.
Some of the findings unveiled through analysis of data gathered from GST are:
- There has been a large increase in the number of indirect taxpayers post-GST. UP and West Bengal have seen large increases in the number of tax registrants compared to the old tax regime.
- We know that the businesses having turnover below Rs.20 lakhs do not have register for GST. But. about 13 % of them have opted to register. Also, businesses having a turnover between Rs.20 lakhs and Rs.1.5 crores can opt for composition levy scheme instead of GST. But, more than 54.3 % of them have voluntarily opted for GST to avail of the input tax credit,
- The distribution of the GST base among the states is closely linked to their Gross State Domestic Product (GSDP). There was anxiety amongst manufacturing states that implementation of GST would erode their tax base. These fears have been allayed. The biggest tax bases still seem to be the biggest manufacturing states and this tax base is positively correlated with their GSDP. It suggests fairness.
- New data on the international exports of states suggests a strong correlation between export performance and states’ standard of living. It means that a state which exports more is more prosperous in terms of per capita income. Five states that account for 70 % of India’s exports are- Maharashtra, Gujarat, Karnataka, Tamil Nadu, and Telangana
- India’s exports are unusual in that the largest firms account for a much smaller share than in other comparable countries. A sample study of 32 countries suggests that the top 1 percent of exporting firms account for over 50 percent of exports. In India, it is only 38 %
- India’s internal trade in goods and services is about 60 % of GDP.
- India’s formal sector is substantially greater than currently believed. One definition of formality is when firms are part of the tax net. In terms of being part of the GST net, the size of the formal sector payroll share is 53 %.