India's introduction of the Goods and Services Tax (GST) marked a significant milestone in the country's taxation history. The tax base has more than doubled since its implementation in 2017, with revenues experiencing substantial growth. However, there is still room for more businesses to enroll in GST. There is potential for further growth and harmonization in the future.
On July 1, 2017, India woke up to an unprecedented transformation in its tax landscape as the Goods and Services Tax (GST) took center stage, promising to be the answer to demands for a streamlined indirect taxation system for 1.4 billion citizens. With its motto, "One nation, One market, One tax," GST aimed to bring unity and benefits for all stakeholders, governments, taxpayers, and administrators alike.
The giant leap in taxation history: One umbrella for all - GST's introduction marked a significant milestone in the history of taxation in India. The introduction of this comprehensive system was particularly remarkable in a diverse and federal country like India where multiple tax laws were consolidated into a single system.
The taxpayer base has witnessed a remarkable increase, surging from 63.9 lakh in 2017 to approximately 1.40 crore currently. Despite the revision in threshold turnover limits, GST revenues have experienced substantial growth. In its initial year, the monthly average stood at ₹89,885 crore, but it has now stabilised at a robust 'new normal' ₹1.50 lakh crore in the last financial year, reaching a peak of ₹1.87 lakh crore in April 2023.
Bringing the nation together: A seamless market and digitized compliance - GST laid the foundation for a seamless national market, reshaping India's tax landscape and driving economic growth. By digitising processes from registration to return filing, the GST portal ensured smoother compliance for businesses, fostering a tech-enabled environment.
One of the greatest benefits of GST has been the digitisation of processes. Right from obtaining a registration to filing a return or getting a refund, every single process is entirely online.
Challenges: Challenges persisted - Complexities in return forms and the ambiguity surrounding tax rates and classifications of certain goods and services, leading to disputes and uncertainty.
Additionally, combating tax fraud remained a priority, with measures in place to ensure compliance and weed out fraudulent businesses. Every month, there are cases of tax fraud reported amounting to thousands of crores of rupees. The exchequer is trying its best to put an end to this menace by increasing the stringency of compliance measures, especially surrounding input tax credit claims. This has created hardships for the honest taxpayer.
As India continues to embrace the transformative power of GST, it sets the stage for further harmonization and prosperity. Experts believe, GST has shown immense promise, reshaping the economy and driving digitization while also confronting challenges and fraud.
