GS3 PYQ (Mains Answer Writing): Goods and Services Tax Act, 2017 | Indian Economy for UPSC CSE PDF Download

Enumerate the indirect taxes which have been subsumed in the goods and services tax (GST) in India. Also, comment on the revenue implications of the GST introduced in India since July 2017? (UPSC MAINS GS3 )

Introduction
GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. Under the GST regime, the tax is levied at every point of sale. In the case of intrastate sales, Central GST and State GST are charged. Inter-state sales are chargeable to Integrated GST. In the earlier indirect tax regime, there were many indirect taxes levied by both state and center.
States mainly collected taxes in the form of Value Added Tax (VAT). Every state had a different set of rules and regulations. Interstate sale of goods was taxed by the Centre. CST (Central State Tax) was applicable in case of interstate sale of goods. Other than above there were many indirect taxes like entertainment tax, octroi and local tax that was levied by state and center.
The following is the list of indirect taxes in the pre-GST regime. 

CGST, SGST, and IGST has replaced all of these: 

• Central Excise Duty 
• Duties of Excise 
• Additional Duties of Excise 
• Cess 
• State VAT 
• Central Sales Tax 
• Purchase Tax 
• Luxury Tax 
• Entertainment Tax
• Entry Tax 
• Taxes on advertisements 
• Taxes on lotteries, betting, and gambling

Revenue implications of GST since July 2017

• GST was introduced in July 2017. After the initial transitional issues following the roll-out of GST, revenue collection picked up from an annual average of 89.8 thousand crores in 2017-18 to 98.1 thousand crores in 2018-19.
• However in 2018-19, indirect taxes have fallen short of budget estimates by about 16 per cent, following a shortfall in GST revenues (including CGST, IGST and compensation cess) as compared to the budget estimates. Indirect taxes have fallen by 0.4 percentage points of GDP primarily due to a shortfall in GST collections.
• According to the Economic Survey, though there has been an improvement in tax to GDP ratio over the last six years, gross tax revenues as a proportion of GDP has declined by 0.3 percentage points in 2018-19 over 2017-18.

Conclusion 
Revenue implication of GST. Nearly two years have passed since, and there’s a widespread perception that GST revenue growth has not lived up to expectations. Post implementation of GST, the Centre’s revenue from goods and services (excluding Central excise on petroleum and tobacco) registered a decline of 10 per cent in 2017/18, compared to the revenue from the subsumed taxes in 2016/17.
In 2018/19, the Union government had to revise its GST collection target by Rs 1 lakh crore - from Rs 7.43 lakh crore to Rs 6.43 lakh crore. The target for 2019/20 is Rs 6.63 lakh crore, just Rs 20,000 crore more than the last year’s revised target.

Topics Covered - GST