Union Finance Minister Nirmala Sitharaman shared a post on social media on Monday highlighting that GST (goods and services tax) has reduced taxes on many essential items.
The minister said, “GST reduced taxes on many essential items compared to pre-GST rates. Common items like hair oil and soaps saw tax cuts of 28 per cent to 18 per cent.”
He also highlighted the two recent achievements in the Goods and Services Tax (GST) architecture.
He highlighted the crossing of GST collection of Rs 2 lakh crore and appointment of the chairperson of the GST Appellate Tribunal (GSTAT) as an important milestone.
In his post, he also shared about the history of GST by crediting former Prime Minister Atal Bihari Vajpayee who led the NDA government for initiating the idea and crediting Prime Minister Narendra Modi for its implementation. He also highlighted the complexities of India’s pre-GST indirect tax system, emphasizing the fragmented market and varying tax rates across states.
“Before GST, India’s indirect tax system was fragmented and complicated, and each state was almost a distinct market in itself with different tax rules and rates. Inputs could not be leveraged for central excise duty, etc. , leading to increased tax burden on common people: GST simplified 17 taxes and 13 cesses into a 5-tier structure, simplifying the tax regime,” the post said.
He also highlighted the positive outcomes of GST, including better financing for MSMEs, reduction in logistics costs through e-invoicing system and increase in inter-state trade.
The Union minister also emphasized the pro-poor approach of GST, with effective weighted average GST rates steadily falling since 2017.
Additionally, Sitharaman highlighted the cooperative federalism aspect of GST, empowering states through the decision-making process of the GST council. She debunked the myth that all GST collections are pocketed by the Centre, highlighting the significant contribution to state revenue.
“It is a myth that the Center pockets all the GST collections. The GST contributes significantly to state revenue – states receive 100% of the SGST collected in that state, approximately 50 per cent of the IGST (i.e. from trade inter-state). A major portion of CGST, i.e. 42 per cent, is transferred to states as per the recommendations of the Finance Commission,” the message reads.
“Without GST, the states’ revenue from subsumed taxes from FY18-19 to 2023-24 would have been Rs. 37.5 lakh crore. With GST, the states’ actual revenue amounted to Rs. 46.56 lakh crore,” he added.
The Minister said: “Despite the GST rate being lower than the prescribed revenue neutral rate and COVID-19 impacting revenue, GST collections (as &37; of GDP) have now reached levels that they had before GST (both net and gross). . This shows that the Center and States, collectively, through better tax administration, can collect the same revenue with less burden on our taxpayers.”
In the end, the post concluded by adding, “GST is an expression of Modi Govt’s commitment to `Sabka Saath, Sabka Vikas, Sabka Vishwas, Sabka Prayaas`. Our continuous efforts are aimed at ensuring that new heights are reached through better services to taxpayers. and greater efficiencies instead of higher taxes.
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