The recent surge in the crude oil prices in the United States which negatively impacted on the fuel prices in India for a continuous period of 16 days is likely to increase the revenue of all the states in India during the current fiscal year 2018-2019.
According to a report published by SBI Research, the states in India are likely to improve their additional revenue to the tune of Rs 37,426 crore in the current fiscal amidst the rally in the oil prices and improved tax collection post the implementation of Goods and Services Tax (GST) in the country.
Except for few states in the country, the impact of GST on tax revenue is minimal.
Out of 24 states, 16 of them have witnessed an increase in their revenue kitty over and above 14 percent baseline of tax growth rate shared between the state and the central government after the implementation of GST on July 1, 2017.
The report stated that on an average level, the states have gained Rs 18,698 crores in the form of additional revenue during fiscal 2018. Added with the gains the states made due to the upsurge in the crude oil prices, the overall revenue will be close to Rs 37,426 crores.
After the implementation of the GST, the tax collections of the states has increased due to the broader tax base along with the increased tax compliance.
What is Goods & Services Tax?
Goods & Services Tax or GST is a form of indirect tax levied on the supply of goods and services. It has replaced many kinds of indirect taxes which was previously levied on goods and services in India. It is a form of one indirect tax for the entire county.
Under GST, the tax will be implied at every point of sale. In intra-state sales, both Central GST known as CGST and State GST known as SGST will be levied.
The main advantage of GST is it removes the cascading effect on the sale of goods and services which will directly impact the cost of goods. As the effect of the tax on tax is negated, the cost of goods will decline.