New Delhi: Perhaps in a first, the government may have to recalibrate its budgetary tax collection estimate half-way after the goods and services tax (GST) comes into effect from July.
In Budget 2017-18, Finance Minister Arun Jaitley used the traditional tool of setting a modest growth to the expected revenue collection in the current fiscal for indirect tax projections of the next financial year.
By that yardstick, 2017-18 will be a different year compared with the past. Mid-way, GST will kick in by subsuming all central indirect taxes such as central excise and service taxes as also state levies like VAT into one.
GST collections so made are then to be split equally between the Centre and states. But since there are no reliable estimates of combined VAT collections of states, Mr Jaitley could not project the Centre’s revenue from GST in 2017-18. “Right now, we have not put them under the head of GST because till the law is passed (by Parliament and state legislatures), we cannot account under GST.
“So, we have taken the normal estimate of excise and service tax collection. We have taken a very modest growth rate of about 9 per cent for indirect tax. Because of GST, we may have to wait and watch. So, we are being conservative in estimate,” Revenue Secretary Hasmukh Adhia told PTI here. The GST revenue collections can be arrived at once the all-powerful GST Council, headed by Jaitley, fixes tax rate for every goods and service.
Also, Parliament has to pass two supporting GST legislations and each of the state has to approve one legislation.
Mr Adhia said the heads of excise and service tax in the Budget estimates can be removed once GST comes in. “We can change it (budgetary heads). We can remove the head of excise and service tax and bring in GST. That can be done administratively even from July 1. The government can reappropriate between two Budget heads,” he said.
Indirect taxes have three major components — Customs, central excise and service tax. While projections of Customs revenue will continue to be same through 2017-18, those for excise and service tax may have to be reworked as the same is to be subsumed under GST.
For 2017-18, Mr Jaitley has projected excise collections to rise by 5 per cent to Rs 4.06 lakh crore over revised estimate of Rs 3.87 lakh crore for the current year. This growth is primarily due to 6.3 per cent growth in collections from basic excise duty on petrol and diesel.
Service tax receipts are projected to rise by 11 per cent to Rs 2.75 lakh crore. Customs revenue is projected to climb 13 per cent to Rs 2.4 lakh crore.
In total, the government estimates to collect nearly Rs 9.27 lakh crore from indirect taxes next fiscal, up 9 per cent over 2016-17.
Source : https://goo.gl/7w3C95