GST, surveillance post demonetisation to increase tax-GDP ratio: finance ministry
New Delhi: The implementation of goods and services tax (GST) and increased surveillance post demonetisation will help increase the tax-GDP ratio to 11.9% by 2019-20, government said on Thursday.
The gross tax-GDP ratio in 2017-18 is estimated to be around 11.3%.
In the Medium Term Expenditure Framework Statement, tabled in the Lok Sabha, the has projected that in the medium term tax revenues will show the growth anticipated during the presentation of the Budget. “In other words it is felt that any shocks to tax collections due to the introduction of GST will be absorbed in the current financial year and hence the tax-GDP ratio will remain at the level of 2016-17,” it said.
The government has budgeted for over Rs19.06 lakh crore from taxes in the current fiscal, a growth of about 15% over the last fiscal. As per the statement, going forward “in the years 2018-19 and 2019-20 the gains from expansion of the tax base due to the introduction of GST and the increased surveillance post demonetisation will ensure that tax-GDP ratio will increase by 30 basis points”.
The tax-GDP ratios are projected to be 11.6% in 2018-19 and 11.9% in 2019-20 respectively, it said. Goods and Services Tax (GST) was rolled out from 1 July and it is estimated that the new indirect tax regime would add to revenues and boost GDP by about 2%.
Besides, the demonetisation of Rs500 and Rs1,000 notes have brought an additional over 1 crore people in the tax net. The tax department has launched operation clean money to detect people whose cash deposits post demonetisation does not match their tax profile.