The Finance Ministry has announced that GST has reduced the amount of tax that citizens need to pay. It has also helped in increasing tax compliance and taxpayer base to 1.24 crore. The Ministry said that “It is now widely acknowledged that GST is both consumer and taxpayer-friendly. While high tax rates of the pre-GST era acted as a disincentive to paying tax, the lower rates under GST helped to increase tax”.
In a progression of tweets, on the primary passing commemoration of previous Finance Minister Arun Jaitley, the Ministry said that before the introduction of GST, due to the cascading effect of Value Added Tax (VAT), Excise Tax, and Sales Tax, the standard tax rate use to be 31% which is a high percentage of tax to pay. Around 65 lakh of the country’s population got associated with GST at the time of its origin. Presently, the taxpayer base has surpassed 1.24 crore.
“As we remember Arun Jaitley today, let us acknowledge the key role he played in the implementation of GST, which will go down in history as one of the most fundamental landmark reforms in Indian taxation,” the ministry in reference to the fact that GST was launched in July 2017 by Arun Jaitley tweeted this.
GST has decreased the overall rate at which individuals need to pay tax. The revenue-neutral rate according to the RNR (Revenue Neutral Rate) Committee was 15.3% as compared to the present weighted GST rate as per RBI which is 11.6% only. Organizations with an annual turnover of up to Rs 40 lakh are exempted from GST. At first, this cutoff was Rs 20 lakh. Moreover, those with a turnover up to Rs 1.5 crore can go for the Composition Scheme and as a result, they just have to pay 1% tax.
Soon after the implementation of GST, the tax rate on a large number of items was reduced. Starting at now, the 28% rate is exclusively limited to sin and luxurious products. Out of around 230 products in the 28% slab, around 200 things have been moved to lower slabs.
The Finance Ministry has introduced several relaxations in order to ease the GST compliance burden during COVID-19 mentioned below:
- The 5% slab comprises of the housing sector whereas GST on affordable housing has been reduced to 1%.
- The Ministry also added that “All processes in GST have been fully automated. Till now 50 crore returns have been filed online and 131 crore e-way bill generated”. The GST system allows the generation of e-way bills using several modes, to enhance taxpayer ease. 61.74% of the e-way bills generated have been through the website, 21.55% using the Excel tool, and the rest were through mobile, SMS & APIs,” the Minister’s office tweeted.
- The Finance Ministry further said that due to COVID-19, taxpayers are provided with compliance related relaxation to reduce their burden. Help was given by the introduction of installment deferrals, reduced interest rate, and waiver of late fee/capping of the late fee to Rs 500 in specific cases
- For smaller taxpayers with an annual turnover of up to Rs 5 crore, the rate of interest of GSTR-3B returns was reduced to 9% if in case it is filed by September 30, 2020. Additionally, the obligatory prerequisite of filing returns and proclamation of outward supplies through digital signature have been relaxed.
- The tax rate on basic items has been reduced, for example, hair oil, toothpaste, and cleanser descended from 29.3% in the pre-GST time to 18% under the GST system. Additionally, apparatuses, for example, cooler, clothes washer, vacuum cleaners, food processors and blenders, vegetable juice extractor, shavers, hair scissors, water warmers, hairdryers, electric smoothing irons, TVs (up to 32 inches) have all observed tax rate reduced from 31.3% to 18% due to GST.
It has been observed that since the rollout of GST, the rate changes have been reduced from 14% to 11.6%. The tax base has increased in the last three years. The average amount of tax collected from (July-March) in 2017-18 was Rs 89,700 crore. In 2018-19, this every month normal income assortment rose by 10% to Rs 97,100 crore and Rs 1, 02,000 crore in 2019-20 due to the reduction in tax rate by GST.