It is good to see that the new GST regime has been seen an encouraging start. The collection for July has been more than ₹ 92 thousand crores. The amount has been collected from only 64% taxpayers of the nation. The number has crossed the expected amount of money.
The collection has dispelled the fear of RBI that GST implementation would create hindrance in tax collection. However, the central government must compensate the state government. The compensation would be for the loss of revenue which the states would incur due to the new taxation system. Now, the worry which is making round in the cabinet is whether the central government would be left without right resource which is required to meet the promises.
Cesses would get retained by the central government. Cess rate is accounted for around 8% of the tax collection for July. The credit would not be available for the manufacturers. However, the collection of tax amount would help the government in another way. It would help the government to shape up the financial status of the country in a better way. It would help to have a common tax system between the central and the state. Earlier the multiple state tax system had created confusion and chaos for the central and state government. Such possibilities don’t exist anymore with the implementation of GST.
Now, the new tax system would be excluded from divisible taxation system. Additionally, the effort would be to cover GST rates and add sectors including petroleum and real estate.
This addition is hoped to increase the collection amount and also improve the fiscal consolidation. Earlier the reduction of the gross fiscal deficit has been estimated between 0.7% and 1.2%. In case the states want to increase their resources, they would have to improve the credit rating.