India is celebrating Thursday’s fourth anniversary of the GST. The central administration has identified July 1 as a ‘GST Day’ to mark the implementation of the historic tax reform each year. On this year’s GST day, Financial Minister Nirmala Sitharaman said on Wednesday that over 54,000 payers in GST will issue certificates of appreciation for timely filing of returns and the deposit of tax in cash.
GST is an Indian indirect, multi-stage full tax on the supply of goods and services. GST is a comprehensive tax in India. GST has subsumed nearly every other indirect domestic tax in this country under one head, and it is perhaps the largest fiscal reform in the independent history of India, (such as oil, alcoholic beverages and stamp duty are the great exceptions). At each stage of the production process the GST is imposed, but collected from consumption and eventually all parties other than the final consumer are reimbursed.
The Indian gift of GST income remained over €100,000 in a row for eight months and collected only in the month of May, as said the Union Finance Ministry earlier this month, with a collection of as many as €102,702 collected. This is despite the government’s continued imposition of a lockdown of several states, under a stringent coronavirus disease (Covid-19).
The GST Council temporarily eliminated two medicinal products last month as a result of the Covid-19 pandemic. It reduced the rate of taxation for fifteen other items, such as drugs, oxygen, and testing kits to 5% and for a little over three months reduced the ambulance levy to 12% to help the public and government.
But how the Covid 19 pandemic and the resulting fiscal tension continue to influence the future trajectory of GST remains to be seen, particularly because India faces increasing inequality and deterioration. Experts predict that this will lead to more headwinds for direct tax collections, to a more tentatory exploitation of the indirect tax route, rather than the fuel taxes.
