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  Business   Economy  02 Jul 2018  Higher tax mop up due to reforms

Higher tax mop up due to reforms

THE ASIAN AGE. | R. THINGNA
Published : Jul 2, 2018, 12:25 am IST
Updated : Jul 2, 2018, 12:25 am IST

Statistics available in the public domain suggest that the tax-payer base has widened by 26 per cent in FY 18 compared to the previous year.

While the obvious impact of GST is ease of doing business coupled with the increase in indirect tax collection through greater compliance, the macro fallout has been far greater.
 While the obvious impact of GST is ease of doing business coupled with the increase in indirect tax collection through greater compliance, the macro fallout has been far greater.

The introduction of GST has to be seen as an initiative within the larger group of measures such as demonetisation, benami prohibition and promotion of cashless economy. Only a holistic review of the entire gamut of steps will enable us to understand the impact on the overall tax collections.

While the obvious impact of GST is ease of doing business coupled with the increase in indirect tax collection through greater compliance, the macro fallout has been far greater.

 

The increased compliances have resulted in an impact on direct tax collections and created a long-term consequence of reducing cash deals in the economy.

Statistics available in the public domain suggest that the tax-payer base has widened by 26 per cent in FY 18 compared to the previous year. The direct tax collection observed an increase of 18 per cent over FY17.

Clearly, GST has paved the way to build transparency in the economy and persuaded lakhs of taxpayers to file their returns in a timely manner and therefore ramped up direct tax collections. This will result in a sustained increase in the direct tax collections over the reasonable future as more and more business will come directly under the tax purview.

 

Already, demonetisation and the benami prohibition law have had a conspicuous impact, which has stimulated the tax payers to divulge the assets/property/ undisclosed income and offer the same to tax.

With further simplification of the GST law expected, there will be increased compliance and hence higher transparency. As a result, one may foresee a surge in the direct tax kitty with the exchequer to supplement the target of the government.

(The writer is director at Grant Thornton Advisory Pvt Ltd)

Tags: demonetisation, good and services tax (gst), gst