If implementation of GST also had the prime objective of bringing in the traders from unorganized sphere in the tax net, then the evolving scene has encouraging signs as India’s biggest indirect tax reforms inch close to its first anniversary on July 1st. A finance ministry release says that over half a million traders who were outside of any tax net are now part of GST.
“There are early signs of tax base expansion. Between June and July 2017, 6.6 lakh new agents, previously outside the tax net, sought GST registration. This is expected to rise consistently as the incentives for formalization increase. Entire Textile chain is now brought under tax net. Further, a segment of land and real estate transactions has also been brought into tax net “works contracts”, referring to housing that is being built. This in turn would allow for greater transparency and formalization of cement, steel and other sales which earlier tended to be outside the tax net. The formalization will occur because builder will need documentation of these input purchases to claim tax credit,” the formal release maintains.