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A Large Increase in Registered Indirect and Direct Taxpayers
Feb 1, 2018


The government presented the Economic Survey of India (2017-18) on Monday. One thing that stood out in the survey is the formalization of the economy.

The chart illustrates the same.

Since the launch of Goods and Services Tax (GST), there were 9.8 million unique GST registrants, an increase of 50% compared to the previous tax regime. There has also been a large increase in voluntary registrations, especially by small enterprises that buy from large enterprises wanting to avail themselves of input tax credits.

Similarly, after November 2016, 10.1 million tax filers were added compared to an average of 6.2 million in the preceding six years. Further analysis suggests that new filers reported an average income, in many cases, close to the income tax threshold of Rs. 2.5 lakh, limiting the early revenue impact. As income growth pushes many of the new tax filers in time over the threshold, the revenue dividends should increase robustly.

These changes can have profound effects on the Indian economy. With the increasing tax base, the government will have a significant amount of resources to spend on infrastructure, health and education, While the fiscal deficit will be stable.

As organized players gain market share, it will begin to reflect in corporate earnings and stock prices too.

Data Source: Economic Survey, 2017-18
*Old Tax Filers- an average of last six years

This Chart Of The Day was published in The 5 Minute WrapUp - Jaitley's Operation Green or Operation Cover-Up?

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