Streamlining Support for the Underprivileged: The Impact of GST Hike

Paromita Das

GG News Bureau 

New Delhi, 16th May. Numerous opposition parties voiced their concerns about the Goods and Services Tax’s impending introduction in Bharat during the Central Government’s attempt to impose it. At that time, some opponents went so far as to claim that the country’s Goods and Services Tax system would fail and severely burden the nation’s impoverished population with taxes.

Despite this, on July 1, 2017, the Central Government implemented the Goods and Services Tax system nationwide, incorporating approximately 20 different types of taxes in an effort to streamline the convoluted indirect tax system that had been in place previously in the nation. Traders encountered certain system-related issues shortly after the Goods and Services Tax system went into effect. However, these issues have been progressively resolved with the help of the federal government and several state governments, and as a result, the country’s tax system is currently formalizing quickly under the Goods and Services Tax, which is slowing down the country’s GST collection. That seems to have taken place.

Every nation needs money to grow its economy quickly, and efforts are made to get this money from the citizens of the nation through taxes. One could argue that the tax system, in which citizens pay very little attention to taxes, is a desirable one. The central government has attempted to impose a similar tax system throughout the nation through the goods and services tax, much like a fly collects honey from a rose blossom in a way that the flower is unaware of. Either zero or a very low tax rate has been applied to commodities utilized by the impoverished class. Conversely, a high tax rate has been maintained on commodities utilized by the wealthiest elite. The Goods and Services Tax rate has been fixed at 0%, with maximum rates of 5, 12, 18, and 28 %.

The Goods and Services Tax system was introduced in Bharat more than 6.5 years ago, and since then, the country’s indirect tax collection has grown steadily and quickly, demonstrating the system’s beneficial effects. Details regarding the Goods and Services Tax collection in April 2024 were made public on May 1, 2024. The Goods and Services Tax collection in April 2024 broke all previous records and reached a record level of Rs 2.10 lakh crore, which is a cause for celebration for all of us and demonstrates the strength of the Bharatiya economy. In the fiscal year 2022, the average monthly collection of Goods and Services Tax was Rs 1.20 lakh crore. This figure rose to Rs 1.50 lakh crore in the following fiscal year and eventually reached Rs 1.70 lakh crore in the following fiscal year.

As of April 2024, it has surpassed the threshold of Rs 2.10 lakh crore. This creates the appearance that the country’s population is more interested in abiding by the laws of the economy, that the system is formalizing quickly, and that India’s rate of economic development is accelerating. In summary, Bharat is now making significant progress toward reaching its goal of a $5 trillion US dollar economy within the next two to three years. Prior to 2014, the Bharatiya government was notoriously cautious to make choices regarding policy, and the country’s economy was listed as one of the world’s five most hesitant economies. However, in just ten years, the Bharatiya economy has grown to be the fifth largest in the world and is quickly heading toward becoming the third largest thanks to strong democracy and leadership at the center. This is the year 2024.

The central government and several state governments are currently working hard to enable the impoverished class access to various special schemes as a result of the country’s increased tax collection through the Goods and Services Tax. The monthly distribution of free grains under the PM Garib Kalyan Yojana benefits over 80 crore families. More than 10 crore women have received free gas connections thanks to the PM Ujjwal Yojana. These women’s lives have seen a radical transformation as a result of this. Before, they could make food in their houses by burning wood, but they also had to watch as their vision deteriorated. Over 12 crore toilets have been built as part of the Swachh Bharat Mission to protect women’s safety and dignity. More than 52 crore accounts have been opened by citizens under the Jan Dhan Account Scheme, bringing them into the formal banking system. This has encouraged the impoverished segment of citizens to become financially included. In India, more than 11,000 Jan Aushadhi Kendras have been established to provide vital medications at reduced prices ranging from 50 to 90%.

Additionally, Jal Jeevan Mission has accomplished a significant milestone by connecting over 75% of Bharatiya households to tap water. The Mission has expanded the number of rural tap connections from 3.23 crore households in 2019 to over 14.50 crore homes in just 4 years. Comparably, more than 4 crore pucca dwellings have been constructed in both rural and urban regions under the PM Awas Yojana, while 2.8 crore houses nationwide have been electrified under the Saubhagya Yojana. The Pradhan Mantri Jan Arogya Yojana, the largest government-funded healthcare program in the world, offers insurance coverage of Rs 5 lakh per family for secondary and tertiary care and hospitalization to 55 crore people.

Not only have specific programs for the impoverished been introduced as a result of the increase in Goods and Services Tax collection, but it has also become simpler for the Central Government in particular to boost its capital expenditure. The Union Budget for the fiscal year 2024–2025 has proposed a capital expenditure of Rs 11.11 lakh crore, which was Rs 10 lakh crore for the fiscal year 2023–2024 and Rs 7.5 lakh crore for the fiscal year 2022–2023. The country’s private sector has been drawn to boost its investment as a result of the Central Government’s massive capital spending program. Additionally, international financial organizations are now investing more outside in Bharat. In addition, the central government’s budget appears to be successfully lowering the level of fiscal deficit as a result of the ongoing rise in the Goods and Services Tax revenue. As a result, the government is able to borrow money from the market to cover its spending needs. Additionally, there will be less need to take out loans.