17.8 ndian onom
surely alter our understanding of the economy19. firms in the private non-agriculture sector
Data from the GST can help unveil some long- but 93 per cent of their total turnover.
elusive and basic facts about the Indian economy. As per the Survey, the above-given list is a
As per the Economic Survey 2017-18 , some mere sampler, giving a hint of the insights
exciting new findings include: that analysis of the GST will be able to
A large increase in the number of provide in the future—a whole new world
indirect taxpayers has been noticed; has indeed opened up and much exciting
many have voluntarily chosen to be part new research lies ahead.
of the GST, especially small enterprises
that buy from large enterprises and want coMModiTies TransacTion Tax
to avail themselves of input tax credits.
The distribution of the GST base among The Union Budget 2013–14 has introduced
the states is closely linked to their Gross (basically, reintroduced) the Commodities
State Domestic Product (GSDP), Transaction Tax (CTT), however, only for non-
allaying fears of major producing states agricultural commodity futures at the rate of 0.01
that the shift to the new system would per cent (which is equivalent to the rate of equity
undermine their tax collections. futures on which a Securities Transaction Tax is
New data on the international exports imposed in India). Alongwith this, transactions in
of states suggests a strong co-relation commodity derivatives have been declared to be
between export performance and states’ made non-speculative; and hence for traders in the
standard of living. commodity derivative segment, any losses arising
from such transactions can be set off against income
India’s exports are unusual in that the
from any other source (similar provisions are also
largest firms account for a much smaller
applicable for the securities market transactions).
share than in other comparable countries.
Internal trade is about 60 per cent of Like all financial transaction taxes, CTT
GDP (even greater than estimated by the aims at discouraging excessive speculation, which
Economic Survey 2016-17) and compares is detrimental to the market and to bring parity
very favourably with other large countries. between securities market and commodities market
such that there is no tax/regulatory arbitrage.
India’s formal sector non-farm payroll
Futures contracts are financial instruments and
is substantially greater than currently
provide for price risk management and price
believed. Formality defined in terms
discovery of the underlying asset commodity /
of being part of the GST net suggests a
currency / stocks / interest. It is, therefore, essential
formal sector payroll of 53 per cent of the
non-agricultural work force. However, that the policy framework governing them is
it stands only at 31 per cent in terms of uniform across all the contracts irrespective of
social security provisions. the underlying assets to minimise the chances of
regulatory arbitrage. The proposal of CTT also
Similarly, the size of the formal sector
appears to have stemmed from the general policy
(defined here as being either in the social
of the government to widen the tax base.
security or GST net) is 13 per cent of total
Commodities Transaction Tax (CTT) is a
19. Economic Survey 2017-18, Vol. 1, Ministry of Finance, tax similar to Securities Transaction Tax (STT),
N. Delhi, pp. 32-42.
proposed to be levied in India, on transactions