Shift to formal trade slower than expected

  1. According to a recent report,Goods and Services Tax (GST) which was introduced in 2017 has seen the Indirect tax collections increased.However, shift in trade towards a formal economy has been slower than expected.
  2. The report also said that under GST regime,the manufacturing sector witnessed an increase in working capital requirements while the services sector has had to comply with increased state-level compliances and higher tax rates.
  3. Further,the report said that there are various issues in GST that needs to be addressed such as (a)GST has multiple tax slabs (b)the technology glitches in the GST platform and (c)non-clarity over certain procedural issues.
  4. GST (Goods and Services Tax) is an indirect tax that has replaced many Central and State taxes like excise duty,VAT and service tax.It is a single tax on the supply of goods and services.GST is a destination based tax as it is applied on goods and services at the place where final/actual consumption happens
  5. GST is applied to all goods other than crude petroleum,motor spirit, diesel,aviation turbine fuel and natural gas and alcohol for human consumption.There are four slabs for taxes for both goods and services- 5%, 12%, 18% and 28%.