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Mittal School of Business

Academic Task -1

Name of the faculty member: Dr. Rajender Singh

Course Code: ECO219 Course Title: Public Economics

Class: B Sc. Economics 5th Sem

Max. Marks: 30

Date of Allotment: 29-08-2020 Date of submission: 12-9-2020

 

 

Submitted by: Bismark Agoba Opoku

Reg no: 11815912

Roll no: (A) 12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COLLECTION OF GST FROM INDIAN SERVICE SECTOR DURING LAST THREE YEARS

INTRODUCTION:

GST was brought in as a revolutionary change and India’s biggest tax system overhaul since Independence. GST replaced a plethora of indirect taxes such as states’ sales tax, service tax, excise, etc., with a single central tax regime applied uniformly on all products and services. However, the biggest benefit of GST was that it opened up entire India as a single unified market allowing for free movement of goods across states’ borders, as opposed to the earlier scenario where state borders became barriers. GST allowed for faster movement of trucks and led to requirements for fewer warehouses across several states. However, GST has multiple tax rate slabs for different categories of products – a fact that still makes it more complicated than many expected.

 

GOODS AND SERVICE TAX:

Goods and Service Tax is one of the biggest indirect tax reforms in the country. GST is likely to bring together state economies and progress overall economic growth of the nation.

GST is a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by states and Central.

There are more than 160 countries in the world that have GST in place. GST is a destination based taxed where the tax is collected by the State where goods are consumed. Which means that if a good is produced in Delhi and is consumed in Punjab, the GST will be levied on the person consuming the goods in Punjab. India is going to implement the GST from July 1, 2017 and it has adopted the Dual GST model in which both States and Central levies tax on Goods or Services or both.

TYPES OF GST:

·        Central GST (CGST): GST paid on each transaction is divided into two equal parts: the part for the Centre is termed as CGST.

·        State GST (SGST): The part of a state’s share of GST, when a transaction takes place within the state, is called SGST.

·        Union territory GST (UGST): When a transaction takes place within a union territory (UT) without a legislature, the part of GST that the UT gets is called UGST.

Integrated GST (IGST): When a transaction takes place between two states or between a state and any foreign territory, IGST is levied without any bifurcation on the applicable GST rate

The GST rates on different goods and services are uniformly applied across the country. Goods and services have, however, been categorised under different slab rates for tax payment. While luxury and comfort goods are categorised under higher slabs, necessities have been included in lower and nil slab rates. The main aim of this classification is to ensure uniform distribution of wealth among residents of India

The GST council has fitted over 1300 goods and 500 services under four tax slabs of 5%, 12%, 18% and 28% under GST. This is aside the tax on gold that is kept at 3% and rough precious and semi-precious stones that are placed at a special rate of 0.25% under GST

GST Slab of 5%

Under this slab of GST, the goods of basic services are covered such as sugar, oil, spices, coffee, coal, fertilizers, tea, ayurvedic medicines, agarbatti, sliced dry mango, cashew nuts, sweets, handmade carpets, lifeboats, fish fillet, unbranded namkeen, and life-saving drugs are covered.

The services under this slab include railways, airways, takeaway food, AC and Non-AC restaurants, hotel rooms with a tariff less than Rs. 7,500, and special flights for pilgrims.

GST Slab of 12%

Under this slab, products like cell phones, sewing machine, umbrella, jewellery box, along with processed foods like frozen meat, fruit juices, butter, cheese, ghee are covered.

The services under this slab include business class flight tickets and movie tickets below Rs. 100.

GST Slab of 18%

Under this slab products like hair oil, safety glass, pasta, pastries, ice-cream, mineral water, hair shampoo, oil powder, water heaters, washing machine, detergent, scent sprays, leather clothing, cookers, oil powder, cutlery, binoculars, artificial flowers, wristwatches, suitcase, briefcase, shaving, after-shave, furniture, stationery items, mattress monitors, etc are covered.

The services under this slab include restaurants within hotels whose tariffs are above Rs. 7,500, actual hotel bill below Rs. 7,500, movie tickets above Rs. 100.

GST Slab of 28%

Under this slab, over 200 products are covered like cars, cigarettes, durable consumer products, high-end motorcycles, pan masala, weighing machine, cement are covered.

The services under this slab include racing, betting in casinos, the actual bill of hotel stay above Rs. 7,500.

A special rate of 0.25% is levied on semi-polished and cut stones.

 

 

 

SERVICE SECTOR

The services sector is not only the dominant sector in India’s GDP, but has also attracted significant foreign investment, has contributed significantly to export and has provided large-scale employment. India’s services sector shelters a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community, social and personal services, and services associated with construction.

As of 2018, 31.45 per cent of India’s employed population is working in the services sector.

The services sector is a key driver of India’s economic growth. The sector contributed 55.39 per cent to India’s Gross Value Added at current price in Financial Year 20. Services sector’s GVA grew at a CAGR of 1.45 per cent to US$ 1,064.8 billion in Financial Year 20 from US$ 1,005 billion in Financial Year 16. Net export estimate in Financial Year 20 from services stood at US$ 214.14 billion, while import was at US$ 131.41 billion in Financial Year 20.

Nikkei India Services Purchasing Managers' Index (PMI) stood at 14.6 in May 2020, indicating a contraction as COVID-19 led shutdown impaired businesses

The Government of India recognises the importance of promoting growth in services sector and provides several incentives across a wide variety of sectors like health care, tourism, education, engineering, communications, transportation, information technology, banking, finance and management among others

CONTRIBUTION OF SERVICE SECTOR

Service sector also known as tertiary sector is a crucial for economic development in any economy including India. It has developed as the key and fastest-growing sector in the global economy in the last three decades. The current study makes an analysis of service sector in Indian economy. The paper also makes an analysis of Indian services sector through examining its growth and contributions in the economy. The paper also highlights improvement measures that will enable the services sector to not only to grow at a fast pace but also create quality employment and attract investment. The study confirms that services sector has grown at the important rate in comparison to other sectors. Its growth rate is found to be higher than growth of overall GDP. Rising share of this sector in GDP over shelters the poor performance of agriculture sector. As a service, sub-sector, trade is leading all in terms of its contribution in Indian GDP. The employment percentage in service sector as well as in industry sector is rising while in agriculture, it is falling continuously. A large proportion of Indian population is still engaged in agriculture sector and the next largest employer is service sector where trade, hotels & restaurants and community, social & personal services are the significant generator of employment. Thus, service sector which is dominant in terms of its growth & shares serves as an engine of growth for Indian economy. It is important for a developing country like India with a large and young population to generate quality employment and move up the value chain. India needs private investments in key infrastructure services such as transport, energy and telecommunications.

 

 

 

 

COLLECTION OF GST FROM SERVICE SECTOR

The public listed companies in India add the highest amount of Goods and Services tax revenues for the government. These companies include a mere 0.62 per cent of the overall taxpayer base, but they contributed 35.29 per cent of the GST revenues, revealed the statistical report of GST Network after three years of GST. On the flip side, the proprietorships with the maximum 80.18 per cent taxpayer base contributed 13.35 per cent of the revenue. The contributions of PSU companies also remained significant as they comprised only 0.02 per cent share in the taxpayer base but accounted for 9.12 per cent of the total GST revenue.

The GST revenue in the country remained twisted as most of the revenues have been generated by the businesses with an annual turnover above Rs 5 crore. These businesses including a taxpayer base of 7 per cent contributed 80.7 per cent to overall GST revenue. While 22 per cent of the taxpayers recorded nil tax liability under GST, 28 per cent of the taxpayers having an annual turnover of up to Rs 20 lakh accounted for 1-2 per cent of the revenue

The Goods and Services Tax was implemented in India by the Narendra Modi government on July 1, 2017. The government aimed to bring in an indirect tax regime with a theory of ‘One Nation, One Tax’. However, various sub-divisions and various kinds of cess made the arrangement of products bulky at the micro-level, which is still a pain for many traders in the country

Meanwhile, with an aim to introduce transparency in the tax, the GST Council is still amending the rules according to the need of the businesses. Though issues such as inverted duty structure are yet to be addressed, clarity on imports and exports of various products have been provided by the government. As on 6 July 2020, there are 1.23 crore registered taxpayers under GST and 47.2 crore GST returns have been filed. Recently, the government has also introduced a facility to file GSTR 1 and GSTR 3B returns via SMS

 

 

 

 

 

 

 

 

 

 

 

GST MONTHLY COLLECTION FOR THE PAST 3 YEARS

From 1st July 2017 GST has been implemented in India. Here we are providing Monthly Collection statics from GST Tax. How much you have paid to India Govt. in Account of GST. India govt. gets revenue from GST tax in monthly in thousand's crore. The tax is collected by govt. in name of Development. GST is not only tax that you have paid there are many more taxes’ apart from GST in which govt. takes peoples hard earned money like - Excise Duty, VAT on Patrol and Diesel, Stamp Duty, Royalty, Custom Duty, Professional Tax, Income Tax, Various penalties, Various charges. 

GST Collection Financial Year 2020 -2021
S.No.	Year	Month	Amount Collected (In Thousand Crore's)
1	2020	April	28,309 (Not Finalized Yet Due to Extending date of filling GSTR 3B)
2	2020	May
3	2020	June
4	2020	July
5	2020	August
6	2020	September
7	2020	October
8	2020	November
9	2020	December
10	2021	January
11	2021	February
12	2021	March

 

GST Collection Financial Year 2019 -2020
S.No.	Year	Month	Amount Collected (In Thousand Crore's)
1	2019	April	1,13,865
2	2019	May	1,00,289
3	2019	June	99,939
4	2019	July	1,02,000
5	2019	August	98,203
6	2019	September	91,916
7	2019	October	95,380
8	2019	November	1,03,491
9	2019	December	1,03,184
10	2020	January	1,10,000
11	2020	February	1,05,366
12	2020	March	97,597

 

GST Collection Financial Year 2018 -2019
S.No.	Year	Month	Amount Collected (In Thousand Crore's)
1	2018	April	1,03,458
2	2018	May	94,016
3	2018	June	95,610
4	2018	July	96,500
5	2018	August	93,960
6	2018	September	94,442
7	2018	October	1,00,710
8	2018	November	97,637
9	2018	December	94,700
10	2019	January	1,02,000
11	2019	February	97,247
12	2019	March	1,06,577

 

GST Collection Financial Year 2017 -2018
S.No.	Year	Month	Amount Collected (In Thousand Crore's)
1	2017	July	94,063
2	2017	August	90,669
3	2017	September	93,141
4	2017	October	83,346
5	2017	November	80,808
6	2017	December	86,703
7	2018	January	86,318
8	2018	February	85,174
9	2018	March	1,03,458
Total			8,03,680

 

 

 DATA INTERPRETATION

2018

Since the implementation of the indirect tax system from 01st July 2017, GST Tax Collection Revenue was slipped to Rs. 80,808 crores lowest in the month of November 2017.

Unit now, one crore taxpayers have been registered under the new indirect tax system. Out of this 56.30 lakh GSTR 3B summary return form, have been filed for December 2017.

Out of the total number of taxpayers, 17.11 lakh are composition dealers who file returns every quarter end. A Total of 8.10 lakh returns were filed by composition dealers in the month of December 2017.  Small manufacturers, traders, and restaurants are paying tax at concessional rate had paid Rs 335.86 crores for the quarter ended September 2017.

Tax experts said that the rise in December’s GST Tax Collection Revenue reflects stabilization in Goods and Service Tax.  Initially, taxpayers faced issues in GST Transition which are now reducing as the time passes.  Therefore, further growth is expected in GST Tax Collection Revenue.

The rise in GST mop-up for Dec is anticipated to bring some relief to the government’s finances. The numbers might supply a pointer to the collections beneath the new revenue enhancement regime in Dec, shows trend being reversed coming into a stabilization section and broader compliance rising on account of the speed cuts.

In its 25th meeting held on January18; the GST Council had focused on anti-evasion measures. These measures include the imposition of reverse charge mechanism (RCM) for composition scheme dealers along with the Away bill rollout from February 1. Government is further expecting to increase this revenue by implementing the e-way bill rules.   This will bring more transparency to the movement of goods from one place to another.

 

2019

The total GST revenue collected in the month of December 2019 remained almost similar to that of November 2019. Thus, the amount of revenue collection in the month of December 2019 is ₹ 1,03,184crore.

The breakup of this collection is CGST ₹ 19,962crore, SGST is ₹ 26,792crore, IGST is ₹ 48,099crore and Cess is ₹ 8,331crore. In the case of GST returns, the total number of GSTR 3B Returns filed for the month of November up to 31st December, 2019 is 81.21lakh.

Further, the GST revenue for the month of December 2019 from domestic transactions is gone up by 16% over the revenue during the month of December 2018

2020

The Government collects Rs. 86,449 as GST revenue for the month of August 2020. This figure is nearby to the previous month. Therefore, there is no major shortfall of revenue during the month of August 2020.

/8The above collection consist of CGST is Rs. 15,906 crores, SGST is Rs. 21,064 crores, IGST is Rs. 42,264 crore and Cess is Rs.7,215 crore.

Further, the government has settled Rs. 18,216 crores to CGST and Rs. 14,650 crores to SGST from the IGST head collection. Thus, the total revenue earned by the Central Government and the State Governments in the month of August 2020 is Rs. 34,122 crores for CGST and Rs. 35,714 crores for the SGST.

CONCLUSION:

The services sector is the largest sector in India. The services sector accounts for 53.66% of total India's GVA of Rs. 137.51 lakh crore. The industrial sector is at the second spot and contributing around 31% of the Indian GDP. The agriculture sector is at the third spot and contributing around 16% of the Indian GDP.

At present, the Indian economy is passing through a tough time. But it is expected that our economy will recover from this slowdown very soon.

As per the latest report of 'World Economic League Table 2020'; India has overtaken both France and the UK to become the world's 5th largest economy in 2019.

• Removal of bundled indirect taxes such as VAT, CST, Service tax, CAD, SAD, and Excise.
• Less tax compliance and a simplified tax policy compared to current tax structure.
• Removal of cascading effect of taxes i.e. removes tax on tax.
• Reduction of manufacturing costs due to lower burden of taxes on the manufacturing sector. Hence prices of consumer goods will be likely to come down.
• Lower the burden on the common man i.e. public will have to shed less money to buy the same products that were costly earlier.
• Increased demand and consumption of goods.
• Increased demand will lead to increase supply. Hence, this will ultimately lead to rise in the production of goods.
• Control of black money circulation as the system normally followed by traders and shopkeepers will be put to a mandatory check.
• Boost to the Indian economy in the long run.

These are possible only if the actual benefit of GST is passed on to the final consumer. There are other factors, such as the seller’s profit margin, that determines the final price of goods. GST alone does not determine the final price of goods.

 

REFERENCES:

 RBI website

IMF website

 www.economictimes.com

 www.business-standard.com