As a wide fiscal deficit poses concerns, the revenue department has increased its focus on improving tax compliance to shore up indirect tax revenues and implementation of Goods & Services Tax (GST) in coming years, which would result both in growth and increased revenues, said a report by Ernst & Young.
According to the report titled ‘Indirect Tax in 2013: With change comes complexity’, the economic crisis has led to more countries than ever before to rely on indirect taxes as a sustainable method to rebalance their budgets and stimulate growth.
The report found that the growing prominence of indirect taxes places more pressure on tax administrations to enforce compliance, particularly given that a third of tax revenue is derived from VAT/ GST and taxes on specific goods and services such as excise taxes, customs duties and certain special taxes.
The report said it is expected that the filing period for periodic service tax returns will be changed from biannual to monthly or quarterly intervals. The Central government has also proposed integrating the service tax returns and excise returns.
According to the report titled ‘Indirect Tax in 2013: With change comes complexity’, the economic crisis has led to more countries than ever before to rely on indirect taxes as a sustainable method to rebalance their budgets and stimulate growth.
The report found that the growing prominence of indirect taxes places more pressure on tax administrations to enforce compliance, particularly given that a third of tax revenue is derived from VAT/ GST and taxes on specific goods and services such as excise taxes, customs duties and certain special taxes.
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“The economic crisis has resulted in the global predicament of high fiscal deficits which applies to India. With a low tax GDP ratio, India is trying to shore up indirect tax revenues with the Centre expanding service tax with introduction of negative list last year. States have equally tinkered with VAT rates upward to garner revenues in recent times,” Harishanker Subramaniam, Partner Ernst & Young.
The report said it is expected that the filing period for periodic service tax returns will be changed from biannual to monthly or quarterly intervals. The Central government has also proposed integrating the service tax returns and excise returns.