The Goods and Service Tax (GST) has helped both Centre as well as States to gather data on small manufacturers and consumption, and the entire textile chain is now brought under tax net and segment of land and real estate transactions has also been brought into tax net “works contractsâ€Â, Finance Ministry said.
According to the Ministry of Finance, GST has resulted in formalisation of economy and consequently information flow would eventually augment not only the indirect tax collections but also direct tax collections.
In the past, the Centre had little data on small manufacturers and consumption because the excise was imposed only at the manufacturing stage while the States had little data on the activities of local firms outside their borders. Under the GST, there will be now seamless flow of availability of common set of data to both the Centre and the States making Direct and Indirect Tax collections more effective, the Ministry said. There are early signs of tax base expansion. Between June and July 2017, 6.6 lakh new agents, previously outside the tax net, sought GST registration. This is expected to rise consistently as the incentives for formalization increase.
The introduction of GST, a common Indirect Tax for both the States as well as the Central Government with its end to end digitization of all processes, is the biggest reform measure which is already creating more jobs in formal sector and eliminating transactions which are not recorded earlier in the books of accounts and thus, were outside the tax net so far.