Jay Sairam
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After implementation of GST during the year, there will be tax collection in the key aspects of the budget. GST was implemented with the intention to increase tax compliance by removing tax duplication in the states. During the period from July to December, GST tax has been continuously decreased, the fiscal deficit is increasing.
If the GST storage rate is depleting, Government is indicated to announce additional government debt of the same amount. So, let's take a look at Malaysia's case study - the last country to implement GST before India.
Brokerage Edelweiss has a case study on India's GST. The snapshots of the study are as follows:
What happened in GST Tax collection in Malaysia?
The Malaysian government took 1.5 years to prepare for GST implementation.
After one year of its implementation, GST registrators exceeded the target of 412,000 by more than 20%.
The Malaysian government has improved its audit track using Undercover Tax Officers and it becomes difficult to do business until it is registered.
Despite the large number of SMEs (97%), the transition has been accepted.
After 1 year of implementation, about 12% of the total government revenue is GST equivalent collection, which is up to 19.4% of revenues.
We hope that GST tax collections of India will increase next year due to technological barriers and easy change.
What to learn from Malaysia should be learned:
GST tax compliance in Malaysia is 90%
Despite the large number of SME enterprises (97%), the transition to GST has been successful
Better technological preparedness to adopt a new tax system
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