GST: Boost for businesses.
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The Goods and Services Tax (GST), the biggest indirect tax transformational reform in India, was implemented on July 1, 2017, after a decade-long consultation process. GST subsumed multiple and complex Central and State taxes, with the aim of simplifying and enhancing the efficiency of the tax system, promoting ease of doing business, and reducing tax incidence under the rubric of One Nation One Tax.

The GST Council played a pivotal role in the successful implementation of GST by monitoring its overall implementation across the country and facilitating consensus building and decision making among the Central and State governments. Constitution of the GST Council is a unique example of cooperative federalism in India that can be replicated in other areas as well in achieving goals of a ‘Viksit Bharat’.

Successful adoption

Over the past few years, GST has been adopted successfully across sectors. Its roll-out provided the much-needed fillip to the indirect tax administration as it transformed manual assessments and reduced documentation and processes significantly through digitalisation and faceless compliances. This in turn has led to visibly improved buoyancy in tax revenues and significant increase in compliance levels.

Central Board of Indirect Taxes and Customs (CBIC) has been actively introducing various trade facilitation measures since the introduction of GST to simplify compliance procedures and enhance ease of doing business. Extensive outreach programmes and help-centres set up by CBIC assisted taxpayers by increasing awareness and understanding GST compliance requirements.

Since its introduction, taxpayer registrations through GST portal have almost doubled to 1.44 crore. GST revenue has recorded significant growth, increasing from an average of ₹0.90-lakh crore per month in 2017-18 to ₹1.5-lakh crore in 2022-23. It is expected to exceed ₹1.7-lakh crore per month in the current fiscal year.

Technology and data analytics have been leveraged greatly for automating tax compliances. In a short span of time, the Goods and Services Tax Network (GSTN) platform has substantially enhanced functionality and improved user experience. The concept of e-invoicing has been introduced to improve invoice reporting and compliance. These measures have reduced the compliance burden on businesses and improved overall efficiency. Use of technology has facilitated the process of refunds through online platforms, significantly reducing processing times and providing refunds faster to taxpayers.

Further, over 2,310 crore e-invoices and 445 crore e-way bills have been issued by taxpayers through the digital platform. Tax payments of over ₹71-lakh crores have been made through the portal.

Further measures

The specific initiatives and measures taken so far under GST require to further evolve over time with changing business needs and rapid pace of technological advancements. Tax management needs to gradually shift focus from administration to good governance, aligning with the vision of a ‘Viksit Bharat’ by 2047.

Reducing the existing four tax slabs to three slabs by merging the slabs of 12 per cent and 18 per cent into one of 14 per cent or 15 per cent, maintaining 5 per cent slab for essential goods and 28 per cent for few luxury/demerit goods would help in removing ambiguities and tax inversions within a category of products.

Widening the scope and reducing conditions for input tax credits to include all business expenses can bring many benefits and lower costs. Also, consensus required with the States for introducing centralised registrations and assessments for pan-India service suppliers.

The landmark GST regime has provided a significant boost to Indian businesses and improved competitiveness by eliminating the cascading impact of taxes and encouraging a conducive business environment.

Business Line

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