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India's Tax Revenues to Get a GST Boost
Jul 24, 2017

The current GST regime has created a lot of uncertainties, at least for the time being. On the corporate earnings front, the GST implementation may impact near term earnings of the companies however, over a long run, the market expectations are that earnings would normalize. In addition, it is expected to be a big support to the depressed earnings of the organised listed Indian companies.

Already, there are some interesting changes visible on the ground. According to an article by Livemint, the number of registered tax payers under the goods and services tax (GST) till date is set to exceed those in the previous indirect tax regime of value-added-tax etc. Reportedly, around 7.95 million applicants have sought GST registration. That is 99.3% of the 8 million tax base under the earlier system comprising of assesses of state value-added tax (VAT), service tax and central excise duty.

Implications of this increase in tax compliance and widening of tax base is clear. India's tax revenues will get a much needed boost in the coming future. This augurs well for the country that has one of the lowest tax revenue as a percentage of GDP compared with other countries. We believe this higher tax revenue receipt will help bolster the country's financials and also provide further ammunition for the government to spend on social welfare and providing additional infrastructure to its citizens.

A wider tax base will also allow the government to lower its tax rates in future. After studying these and other finer aspects of GST, our colleague Vivek Kaul, has penned his views on what could go right and wrong. Get a balanced perspective on the entire GST saga from Vivek. The report is titled The Good, the Sad and the Terrible (GST). Claim your own copy of his special report now.

Data Source: Livemint

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