[carboy]

Originally Posted by chinkara

So either the number of payees grew or there was a disproportionate growth of the organized segment - suggesting deepening of GST network.

I am suggesting it could be neither. That the same set of people got richer & spent more money than before.

Originally Posted by chinkara

And what has K shaped recovery got to do with anything?

It could mean growth spread among a small base.

[V.Narayan]

Originally Posted by carboy

Isn't this "highest ever" record which we see frequently in the headlines actually an irrelevant one? For e.g. let's say our GDP grows only barely by 1% each year from today for the next 20 years. Even then, every year we will have a record breaking highest ever GDP each & every year.

You may wish to read my post carefully instead of reading your own political overtones into my post. I have no where stated this is the highest ever nor have I spoken of or quoted anything to justify your accusation of ' which we see frequently in the headlines '. If you are reading these headlines somewhere please address your point in that forum. You have altogether missed the key point that GST collections are way way beyond any figure that economic theory will throw up. In fact in my monitoring these figures since the start of my career this is the first time I'm observing such steady growth over and above inflation+ GDP growth.

Other than that, lot of stats show that the rich have become richer during the the lockdowns while the poor have become poorer., so it may just be the rich spending more because they have become richer.

Originally Posted by carboy

I am suggesting it could be neither. That the same set of people got richer & spent more money than before.

Please share hard data preferably with the source, presumably a credible one. As this is a economics thread we prefer data, thank you. My data is all from official monthly press releases of the GoI, on GST, as published by the Press Information Bureau. And yours?

Originally Posted by carboy

GDP growth is calculated after adjusting for inflation. i.e. if nominal GDP grows by 6.5% & there is 6.5% inflation, then GDP growth is published as 0%.

Theoretically yes that formula is correct. But if you look at indirect tax collections over a long period of time - say 1985 to date - we will find that collections did not always grow in proportion to GDP growth+ inflation. In fact it was often especially in the 1989-1999 period below that sum. Ineffectiveness in collection skills, evasions, unaccounted for cash transactions etc were behind this. As @chinkara states the key point is that the GST collection has exceeded this theoretical formula by a factor each month. And the answer to that delta lie in digitization, slow death of the cash economy in the non-agro segments, more effective collection.

Originally Posted by chinkara

The numbers are in the post - against ~6.5% GDP growth and ~6.5% inflation, the gross receipts increased by 22%. So obviously there has been a widening of the base.

Thank you @ chinkara.

[DigitalOne]

Originally Posted by carboy

Isn't this "highest ever" record which we see frequently in the headlines actually an irrelevant one?

Originally Posted by carboy

And it may also be with no growth in tax base either.

I lead a team which provides GST tax returns software to many Indian cos. So I know a bit of this domain.

The surge in GST collections in recent years has two fundamental causes:
1. Growth of the economy. I will not talk about this.
2. Stricter compliance and widening tax base. Let me explain in a bit more detail. A couple of years after GST was introduced (2017), two more mandates were introduced - eWay Bills and eInvoicing. Every Business-to-business (B2B) invoice needs an invoice to be registered with the govt electronically. Initially it was mandatory only for companies with turnover greater than 500cr. Gradually, this threshold has been brought down to companies with even 10cr turnover. After eInvoicing was introduced very few can now evade paying the GST or avoid filing tax returns. Failing to pay GST for 2 months leads to automatic suspension of the GST id number, and consequently loss of further business.

With eInvoicing and this vast scale of data, government is now able use analytics to curb fake invoicing that was used to claim input tax credit.
Third, the govt has tweaked rules in certain sectors to widen the tax base. For example, in case of food delivery via Swiggy/Zomato earlier the restaurant had to collect the GST from the customer and pay to the govt. In 2021 rules were changed to put the onus on delivery cos like S/Z. Now the govt gets GST atleast on delivery orders. (It is still very difficult to track dine-in or takeaways).
In short, there has been a massive widening of the tax base in the last 2-3 years.

[chinkara]

Originally Posted by carboy

I am suggesting it could be neither. That the same set of people got richer & spent more money than before.


It could mean growth spread among a small base.

Again, this is GST we are talking about. How is same set of people getting richer even remotely relevant? BUSINESSES pay GST to government - they may collect GST from consumers but GST is fundamentally a Business to Government transaction.

I am sorry but the "K shaped" comment and this one suggests you have little clue of what you are talking about and just repeating some nonsense heard from a political forum.

[Samurai]

Originally Posted by chinkara

Again, this is GST we are talking about. How is same set of people getting richer even remotely relevant? BUSINESSES pay GST to government - they may collect GST from consumers but GST is fundamentally a Business to Government transaction.

Yes, some people do confuse GST with income tax.

Meanwhile I had another question. Couple weeks ago, the CA was telling me that a hotel where I conducted a conference last year, didn't file that invoice as part of GSTR-1. So I can't claim ITC. That means the hotel collected GST from me, but didn't give it to the government. How are they getting away with it?

[carboy]

Originally Posted by V.Narayan

You may wish to read my post carefully instead of reading your own political overtones into my post.

I don't recall adding any political stuff whatsoever. Could you point out what I wrote which was political?

Originally Posted by V.Narayan

I have no where stated this is the highest ever

This is what you wrote - "March 2023, second highest collection ever, next only to the collection in April 2022. April 2023 might be the highest ever recorded collection."

My point is that the highest ever, 2nd higher ever are meaningless stats for something which mostly grows every year.

If today is the highest ever GDP, then even if we grow only 1% per year for the next 10 years, each year we will have the highest ever GDP record.

Originally Posted by V.Narayan

You have altogether missed the key point that GST collections are way way beyond any figure that economic theory will throw up. In fact in my monitoring these figures since the start of my career this is the first time I'm observing such steady growth over and above inflation+ GDP growth.

And I am wondering if it's because of the K-shaped recovery with the rich getting richer & rest of the society growing proportionally.

Originally Posted by V.Narayan

Please share hard data preferably with the source, presumably a credible one. As this is a economics thread we prefer data, thank you. My data is all from official monthly press releases of the GoI, on GST, as published by the Press Information Bureau. And yours?

Your data shows GST collections. Why is compliance the only conclusion which is possible from the data?

Originally Posted by chinkara

Again, this is GST we are talking about. How is same set of people getting richer even remotely relevant?

Yes.

Originally Posted by chinkara

BUSINESSES pay GST to government - they may collect GST from consumers but GST is fundamentally a Business to Government transaction.

Yes & GST is an indirect tax paid on consumption. The rich getting richer & consuming more with a majority of the population not consuming more & without significant change in compliance will also result in higher collection.

[Samurai]

Originally Posted by carboy

Yes & GST is an indirect tax paid on consumption. The rich getting richer & consuming more with a majority of the population not consuming more & without significant change in compliance will also result in higher collection.

It is well-known that GST collection improved because of B2B e-invoicing. B2B, not B2C. I don't understand what that has to do with rich getting richer.

[carboy]

Originally Posted by Samurai

It is well-known that GST collection improved because of B2B e-invoicing. B2B, not B2C.

Well, it's not known to me. And I haven't seen anyone here presenting data which shows this conclusively.

[Samurai]

Originally Posted by carboy

Well, it's not known to me. And I haven't seen anyone her presenting hard data for this either.

This is an high entropy information for you since you are not from the business world. However, for those who are in the business world, this is a low entropy information. We witness it on a daily basis, and therefore don't need convincing.

I hope EY is hard enough source for you:
https://www.ey.com/en_in/tax/gst-com...gst-compliance

[DigitalOne]

Originally Posted by Samurai

Couple weeks ago, the CA was telling me that a hotel where I conducted a conference last year, didn't file that invoice as part of GSTR-1. So I can't claim ITC. That means the hotel collected GST from me, but didn't give it to the government. How are they getting away with it?

The hotel was probably below the turnover threshold for eInvoicing when you conducted the conference last year and didn't need to generate an eInvoice. The government now auto-populates GSTR-1 from the eInvoices generated by the supplier. I can't see how the hotel can get away without filing any invoice as part of GSTR-1, if they are now above the threshold.

[vamsi.kona]

It was interesting seeing both points of view with regards GST, so I tried fetching some data myself. While I understand the broader economic concepts, GST filing is something I am not at all familiar with, though I understand the broad level structure of it. As such someone who are familiar with the terms can shed some light and correct wherever my understanding or assumption is wrong.

I think the below images can provide some clarity as to whether the tax base is increasing or not. The data is only till Mar 2022. I have only inserted select images. The complete file is attached for more clarity.

GST 5YearReport.pdf


The below image shows a gradual growth in overall registrations



This image also suggests increase in New GSTIN and Migration to GST on a consistent basis.


I believe the returns are filed by each organisation and as such can be representative of the overall users/taxpayers. As such the increasing number of returns point towards higher tax base. (Ignore the tickets part) (Correct me if I am wrong)



The below two images just show the overall make up of the GST payers. Small businesses (Proprietorships) make up almost 80% of users but contribute around 13% of revenue.







Again the number of registrations on E-Way bill portal probably point towards a wider tax base.

[GoBabyGo]

Originally Posted by V.Narayan

You may wish to read my post carefully instead of reading your own political overtones into my post. I have no where stated this is the highest ever nor have I spoken of or quoted anything to justify your accusation of ' which we see frequently in the headlines '. If you are reading these headlines somewhere please address your point in that forum. You have altogether missed the key point that GST collections are way way beyond any figure that economic theory will throw up. In fact in my monitoring these figures since the start of my career this is the first time I'm observing such steady growth over and above inflation+ GDP growth.


Please share hard data preferably with the source, presumably a credible one. As this is a economics thread we prefer data, thank you. My data is all from official monthly press releases of the GoI, on GST, as published by the Press Information Bureau. And yours?


Theoretically yes that formula is correct. But if you look at indirect tax collections over a long period of time - say 1985 to date - we will find that collections did not always grow in proportion to GDP growth+ inflation. In fact it was often especially in the 1989-1999 period below that sum. Ineffectiveness in collection skills, evasions, unaccounted for cash transactions etc were behind this. As @chinkara states the key point is that the GST collection has exceeded this theoretical formula by a factor each month. And the answer to that delta lie in digitization, slow death of the cash economy in the non-agro segments, more effective collection.
Thank you @ chinkara.

Hello - As per my reading in various economic forums, 64% of GST is collected from Poor, Lower Middle Class, Middle Class & Upper Middle Class. Contribution of Rich in GST is much lower than of rest of the class. I will be happy to correct myself, if I am wrong.

[Stribog]

Originally Posted by chinkara

I am aware of that - hence the mention of 6.5% GDP growth and 6.5% inflation - hence nominal growth should be ~13%. Against that receipts grew by 22%. Aren't the numbers self evident?
Or should we just argue for argument's sake?

Originally Posted by carboy

Self evident that receipts grew, not that the base grew. We have had a K-shaped recovery.

Some facts.

India's gross tax to GDP ratio was 8.2% in FY 1A0. Hit 15% in 2019. Is at 17% now.

On a net tax revenue basis this is at 11.7% an all time high.

Direct tax ratio was around 1.9% in 2010, 2.11% in 2014 and 2.94% last year. Clearly the IT tax is widening also.

Chinkara is right. You can't argue that tax collection grows in line with GDP growth (true) but then tax collection has grown at 2x GDP growth rate. So it is not just "a wider economy has a larger tax base". That would hold, if tax collection matched GDP growth rates.

Originally Posted by V.Narayan

[b]
Earlier we couldn’t spend money as we didn’t have it. Today we can’t spend it because we can’t execute well enough in several sectors. But still being the ever optimist I am glad we as a nation are finally, finally getting healthy in our tax collections. Now for improving execution and seriously making Govt salaries competitive with the commercial sector or at least at 66% - I'd say another 10 to 15 years for that.

Something is afoot indeed Narayanan ji,

In 04, the Central govt revenues were Rs 1,80,000 cr on a population base of 1.13 bn.

The Maha govt had a revenue of 13,000 cr for some perspective.

Today 10 Indian states each have state revenues ABOVE the 1.8l crore mark. In other words individual states these days have more money than the GoI revenue from 23 years ago.

Which is why we are seeing this monumental capex boom, both physical infra and social capex.

[vamsi.kona]

Originally Posted by GoBabyGo

Hello - As per my reading in various economic forums, 64% of GST is collected from Poor, Lower Middle Class, Middle Class & Upper Middle Class. Contribution of Rich in GST is much lower than of rest of the class. I will be happy to correct myself, if I am wrong.

GST being an indirect tax and applied on almost all goods and services consumed, though at different rates, will always have rich people contributing less because irrespective of how much money one may have, they can only consume upto certain extent. That is the reason widening of Income tax base is very important for a more proportional tax burden based on income levels. And more importantly taxation of agri income beyond a threshold.

[buzzy_boy]

Originally Posted by V.Narayan

But still being the ever optimist I am glad we as a nation are finally, finally getting healthy in our tax collections. Now for improving execution and seriously making Govt salaries competitive with the commercial sector or at least at 66% - I'd say another 10 to 15 years for that.

Wait, are you saying that the head constable, in my circle, who demanded a bribe to file a FIR is actually under-paid?