GST Updates

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