NEW DELHI: Tax buoyancy is likely to take a hit under the Goods and Services Tax (GST) regime with the government predicting a “very modest” 8-9 per cent growth in the indirect tax collections in the first year of GST implementation.
In the previous fiscal year, indirect tax collections recorded a growth of 22 per cent.
Indirect tax collections (central excise, service tax and customs) in 2016-17 stood at Rs 8.63 lakh crore.
“Revenue in first year is uncertain, I am not sure, so can’t project it. It will go up overall but central government’s revenue will be same or not we will have to see. Because we are surrendering the cesses for the GST compensation,” he said. Cesses imposed on taxpayers so far went to the centre without any share to the states.
The Centre has agreed to compensate the states for any revenue losses in the GST regime for the first five years, with 14 per cent growth rate in taxes with a base year of 2014-15.
Also, earlier approximate one crore taxpayers were supposed to migrate to the GST, but Adhia said that the taxpayer base will go down since the threshold limit for registration is Rs 20 lakh on annual turnover.
“If there are 30-50 lakh people between Rs 10-20 lakh threshold, they will not need to register. Taxpayer base will widen over a period, but initially the number of taxpayers will go down. So initially the tax net may shrink, compared to VAT and service tax,” he said.
He said that in all probability the indirect tax collections should report a better growth rate, but the ministry has kept “a modest target” so as not to go wrong on the fiscal deficit.
The last date for migration to GST and to register on the Goods and Services Tax Network (GSTN), which is providing the IT framework, is April 30.