GST formalising economy, widening tax base, says Finance Ministry
The Finance Ministry today said it would be increasingly difficult for businesses to remain outside the tax net as GST is leading to formalisation of the economy.
The Goods and Services Tax (GST) was introduced from July 1 last year to subsume plethora of indirect taxes like excise and sales tax. “Historic tax reform GST has
resulted in formalisation of the economy and consequently information flow would eventually augment not only the indirect tax collections but also direct tax
collections,” the ministry said in a statement. Before GST, the Centre had little data on small manufacturers and consumption because the excise was imposed only
at the manufacturing stage while the states had little data on the activities of local firms outside their borders. Under GST, there will be “now seamless flow”
of availability of common set of data to the Centre and the states, making direct and indirect tax collections more effective.
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