Six years of GST: Govt sees higher collections, better compliance
The focus on technology as an enabler for easing out compliance, transparency and auditing has made GST one of the landmark tax reforms in our country.
NEW DELHI: As GST completes its six years on Friday, experts say the new tax regime finally seem to have started delivering on its promises of better tax collection and better compliance. With increased compliance measures and a nationwide drive against tax evaders and fake invoices, the goods and services tax (GST) revenues have gradually increased over the last six years.
The average monthly collection in 2017-18 stood at Rs 0.9 lakh crore as compared with Rs 1.19 lakh crore in FY22 and Rs 1.51 lakh crore in FY23. “The implementation of GST has made it easier for taxpayers to comply with tax law and this can be seen in the fact that the number of registered taxpayers has increased from 1.03 crore taxpayers that enrolled into GST by April 1, 2018 to 1.36 crore by April 1, 2023,” finance minister Nirmala Sitharaman tweeted on Friday.
The first five years of GST saw the system being tested through many operational challenges and inefficiencies, said Shashi Mathews, Partner, Indus Law, adding that from the sixth year, each month saw record GST collections. “The focus on technology as an enabler for easing out compliance, transparency and auditing has made GST one of the landmark tax reforms in our country,” says Mathews.
However, there is room for improvement. Experts pointed out rampant use of fake invoices remains a cause of concern. They also feel constitution of the GST Appellate Tribunal as the need of the hour. “GST collection significantly increased, particularly in the last one year. The major factors responsible for the surge in tax revenue include tracking of transactions made easier because of e-way bills, e-invoices,” MS Mani, Partner with Deloitte said. But Madhavi Arora, lead economist with Emkay Global, has a caveat.
“GST as a percentage of GDP hasn’t grown much over the years despite the growth in GST revenue numbers. It has remained stable as a percentage of GDP and not increased in a meaningful way,” she said. However, Mani differs with Arora over less increase in GST collection as a percentage of GDP. He said, “One needs to compare GST as a percentage of GDP with pre-GST era by including State taxes too.” Interestingly, the experts are divided over the contribution of inflation in higher GST numbers. Some say there has been a miniscule contribution of inflation but others say nearly 30% increase in the GST numbers is due to inflation.
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