GST leads to Formalization of Economy and Widening of Tax Base

New Delhi-Historic tax reform, the Goods and Service Tax , has resulted in formalization of economy and consequently information flow would eventually augment not only the Indirect Tax collections but




also Direct Tax collections in India. In the past, the Centre had little data on small manufacturers and consumption because the excise was imposed only at the manufacturing stage while the States had little data on the activities of local firms outside their borders. Under the GST, there will be now seamless flow of availability of common set of data to both the Centre and the States making Direct and Indirect Tax collections more effective.