Loading…
Recent Goods and Services Tax (GST) collections reached ₹2 lakh crore, marking a 10-month high.
The significant increase in revenue is primarily attributed to taxes collected on imports.
Tax experts suggest this growth reflects higher international prices and a potential trade imbalance.
The surge is not necessarily indicative of robust domestic demand strength.
GST is a comprehensive, multi-stage, destination-based indirect tax levied on every value addition in India. It subsumed various central and state indirect taxes. The Integrated Goods and Services Tax (IGST) is levied on inter-state supply of goods and services, and on imports. Revenue from IGST on imports is a crucial component of overall GST collection. A 'trade imbalance' occurs when a country's imports significantly outweigh its exports (trade deficit) or vice-versa (trade surplus). An import-driven tax surge, especially when not matched by export growth, can signal a widening trade deficit.
Simple Analogy: Imagine a shop's income comes from selling both locally made items and imported items. If the income from imported items suddenly shoots up, it might mean people are buying more foreign goods, or foreign goods have become more expensive, rather than a boom in local production or demand for local goods.
GST revenue is a critical component of the government's indirect tax collection, directly impacting its fiscal health and ability to fund public expenditure. Trends in GST collection influence budget planning and fiscal deficit targets.
The trade balance (exports minus imports) is a major component of the Current Account within the BoP. Increased imports, even if generating tax revenue, can widen the current account deficit, impacting the country's external sector stability.
Higher international commodity prices directly translate to increased import bills and, consequently, higher import-related GST collections. This can contribute to 'imported inflation' within the domestic economy.
GS-III: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment. Government Budgeting. Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth. Infrastructure: Energy, Ports, Roads, Airports, Railways etc. Investment models.
General Awareness: Indian Economy, Taxation, Fiscal Policy.
Economic & Financial Awareness: Fiscal Policy, Taxation, Balance of Payments, Inflation.
General Awareness: Indian Economy, Basic Economic Concepts.
With reference to the international trade of India at present, which of the following statements is/are correct? 1. India's merchandise exports are less than its merchandise imports. 2. India's imports of iron and steel, chemicals, fertilisers and machinery have decreased in recent years. 3. India's exports of services are more than its imports of services. 4. India suffers from an overall trade/current account deficit. Select the correct answer using the code given below:
Answer: 1, 3 and 4 only
Consider the following statements: Statement-I: India accounts for 3.2% of global export of goods. Statement-II: Many local companies and some foreign companies operating in India have taken advantage of India's 'Production-linked Incentive' scheme. Which one of the following is correct in respect of the above statements?
Answer: Statement-I is incorrect but Statement-II is correct
With reference to the Indian economy, consider the following statements: 1. An increase in Nominal Effective Exchange Rate (NEER) indicates the appreciation of rupee. 2. An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade competitiveness. 3. An increasing trend in domestic inflation relative to inflation in other countries is likely to cause an increasing divergence between NEER and REER. Which of the above statements are correct?
Answer: 1 and 3 only
High
Goods and Services Tax, an indirect tax levied on most goods and services.
Integrated Goods and Services Tax, levied on inter-state supplies and imports.
A situation where a country's imports and exports are not equal, leading to a trade deficit or surplus.
When the total value of goods and services imported exceeds the total value of goods and services exported, plus net income from abroad and net current transfers.