Nirmala Sitharaman announces appointment of first GSTAT president
- In Reports
- 12:24 PM, May 07, 2024
- Myind Staff
On Monday, the Union finance minister, Nirmala Sitharaman, announced the appointment of Sanjaya Kumar Mishra as the president of the Goods and Services Tax Appellate Tribunal (GSTAT), highlighting it as one of the two “significant milestones” within the broader framework of GST.
According to her, the second milestone was surpassing the ₹2 lakh crore monthly revenue collection milestone for the first time since the indirect tax reform was initiated by the Modi government on July 1, 2017. The FM stated that the increasing GST collections affirm the “heightened” economic activities in India, the world's fastest-growing major economy. India's monthly GST collections exceeded the ₹2 lakh crore mark for the first time, reaching ₹2,10,267 crore, while collections in FY24 exceeded ₹20 lakh crore, indicating a robust economy and improved compliance.
According to FM, the tax reform augmented the revenues of both the Centre and the states. “GST has improved tax buoyancy from 0.72 (pre-GST) to 1.22 (2018-23). Despite compensation ending, state revenues remain buoyant at 1.15. Without GST, states’ revenue from subsumed taxes from FY 18-19 to 2023-24 would have been ₹37.5 lakh crore. With GST, states’ actual revenue amounted to ₹46.56 lakh crore,” she said.
According to the experts, the appointment of Justice (Retd) Mishra to lead GSTAT signifies a further advancement in indirect tax reform, as it is expected to swiftly address pending legal matters. The inaugural president of GSTAT, a former chief justice of the Jharkhand High Court, was chosen by a search-cum-selection committee chaired by the Honourable Chief Justice of India.
Earlier, GSTAT faced delays in establishment due to technical challenges and opposition from certain states. Despite the Union cabinet's approval on January 23, 2019, to establish a national bench of GSTAT, the process was stalled due to disagreements among members regarding maintaining a proper federal balance and other technical matters. As sanctioned by the GST Council, the government has now notified the principal bench, to be situated in New Delhi, along with 31 state benches at different locations nationwide.
Sitharaman took this opportunity to recall the nearly seven-year tax reform journey in three parts that unified the domestic markets. “The first part explores the origins of GST and its role in streamlining the Indirect tax system. The second part discusses how GST has benefitted people through a pro-poor approach. The third part underscores GST’s role in promoting cooperative and fiscal federalism,” she said in a post on X (formally twitter).
According to her, “the idea of GST was first mooted during the former PM Atal Ji-led NDA government. In 10 years, UPA was unable to achieve political consensus on GST. Under the leadership of Prime Minister Shri @narendramodi, the necessary consensus was carefully built, and GST Acts were passed by Parliament in 2016,” she said.
Before GST, India's indirect tax system was fragmented and complex, with each state operating as a distinct market with its own set of rules and tax rates. This lack of uniformity meant that businesses couldn't claim input credits for central excise duty, resulting in a heavier tax burden for consumers, the finance minister explained.
GST amalgamated 17 taxes and 13 cesses into a simpler five-tier structure, thus simplifying the tax regime. Additionally, the threshold for registration increased to ₹40 lakh for goods and ₹20 lakh for services (from an average of ₹5 lakh under VAT). GST significantly reduced the number of different submissions across states from 495 to just 12, including challans, forms, and declarations, she added.
Number of registered taxpayers under GST grew to over 14 million in about seven years from about 6.5 million in 2017. “The E-way bill system removed inter-state checkpoints, reducing logistics costs. Trucks travelled 44% more daily, and corruption at tax “nakas” decreased. Consequently, domestic goods’ inter-state trade surged to 35% of GDP in FY22, up from 23.5% in FY18,” she said.
The second part of the note focused on the impact of the indirect tax on people and the ease of total tax burden. “Reflecting a pro-poor approach, the effective weighted average GST rate has consistently fallen since 2017. The Revenue Neutral Rate was suggested to be 15.3% but was lower at 14.4% in 2017, and it has come down to 11.6% in 2019,” she said.
Sitharaman highlighted that GST resulted in reduced taxes on numerous essential items compared to pre-GST rates. Common items like hair oil and soaps saw a tax reduction from 28% to 18%. Electrical appliances faced a lower tax rate of 12% compared to the previous 31.5%. Even movie tickets were subject to lower taxation. Moreover, continuous tax rate rationalisation has been undertaken since 2017. National Anti-profiteering Authority ensured that companies passed the benefits to the consumers.
“GST has exempted many essential items and services, such as unbranded food items, certain life-saving drugs, healthcare, education, public transport, sanitary napkins, hearing aid parts, agricultural services, etc,” she added.
In the third segment of her write-up, the Union finance minister emphasised the impact of GST on reinforcing the Indian federal structure.
“GST exemplifies Cooperative Federalism in India, empowering states. The @GST_Council, with a 75% majority vote requirement, assigns one-third voting power to the Centre & two-thirds to states. Out of 52 meetings, all decisions but one was reached through consensus. As Chairperson of @GST_Council, I have ensured all states’ voices are equally heard without bias,” she said in another post in X.
Sitharaman stated that the increased revenue from GST has been fairly distributed among states according to the agreed-upon formula, despite attempts by some states ruled by opposition parties to politicise the revenue-sharing process.
“It is a myth that all GST collections are pocketed by the Centre. GST contributes significantly to state revenues – States receive 100% of SGST collected in that state, approx. 50% of IGST (i.e. on inter-state trade). A significant portion of CGST, i.e., 42%, is devolved to the states based on the Finance Commission’s recommendations,” she said.
“GST is an expression of Modi Govt’s commitment to ‘Sabka Saath, Sabka Vikas, Sabka Vishwas, Sabka Prayaas’. Our continuous efforts are towards ensuring that new heights are scaled through better taxpayer services and increased efficiencies instead of increased taxes,” she said.
Image source: ANI
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