‘Good and Simple Tax’ has largely achieved its goals

Six years ago, taxpayers were grappling with a variety of indirect tax laws at the Center and states, each with a different compliance mechanism. The Goods and Services Tax (GST) regime has made compliance much simpler for taxpayers by subsuming several indirect tax laws and bringing uniformity in tax laws as well as procedures. It brought the entire compliance process under one pan-India GST network.

In the last six years, the governments at the Center as well as the states have made efforts to reduce the compliance burden through changes in the legal framework and extensive use of technology. The Quarterly Return with Monthly Payment (QRMP) scheme brought major relief for small and medium taxpayers by allowing them to file returns once a quarter, while still allowing input tax credit every month. Reduced compliance burden for small taxpayers by filing ‘Zero’ return by sending just an SMS and annual return for taxpayers availing composition scheme.

Online filing and approval of refunds has made the refund process much simpler and faster. The dispute resolution process has been made online. An amnesty scheme was brought in to help the taxpayers by waiving off or capping late fee for delay in filing returns. As a result of the implementation of GST, there has been an overall reduction in the incidence of tax on goods and services.

Auto Drafted Input Tax Credit (ITC) Details in Form GSTR-2B have been made available to the taxpayer, wherein all the data relating to ITC is available. Auto population of ITC and liabilities in GSTR 3B (payment return) has made return filing very easy. These steps, along with sequential filing of GST returns, linking of GSTR 3B with the filing of GSTR 1 and Aadhaar authentication of registrations, have helped both taxpayers and the tax administration in improving compliance.

The integrated e-way bill platform has significantly reduced the supply chain lead time and cost for taxpayers as well as helped tax administrations to track the movement of goods and detect tax evasion. The number of e-way bills generated has increased from 5.46 crore in June 2021 to 8.81 crore in May 2023.

E-invoicing has helped taxpayers to automate tax processes. It has made it very easy for taxpayers to file GSTR1 (Return for Outward Supplies) by auto populating the data. It has resolved a major gap in data matching and reduced mismatch errors, made it easier to verify the genuineness of suppliers, and also helped in curbing tax evasion. E-invoice limit, which was initially introduced for taxpayers with turnover above It was reduced to 500 crores from 1 October 2020 From 1 October 2022 it was further reduced to 10 crores and 10 crores 5 crores from 1st August 2023. In October 2020, the number of e-invoices generated was 4.95 crore with an average value of Rs. 16 lakhs per day. This has increased to 18.27 crore invoices in May 2023 with an average value of Rs. 58.95 lakhs per day. GST Network has been able to handle this growth very well.

Governments have come out with regular circulars and clarifications on important issues to bring clarity and reduce litigation. Both the central and state tax administrations have used advanced data analytics and artificial intelligence tools for scrutiny, audit and anti-evasion efforts of GST returns.

Better tax compliance and growth economic activity inspired to strengthen GST Collection, average monthly collection, which was 898.85 billion in 2017-18 1.505 trillion in 2022-23. Monthly collections touched a record 1.87 trillion in April 2023. The tax base has increased to 1.39 crore at the end of May 2023.

Thus, after six years, GST has been able to achieve the objectives set at the time of its implementation to a large extent. There may still be some areas that need attention. One area of ​​concern for taxpayers is litigation and delay in setting up of GST tribunals. The tribunal is likely to start soon. The effort now should be to make compliance faceless and contactless to reduce litigation and make it tax payer friendly. The GST regime has created an ecosystem of transparency and trust, which has helped promote voluntary compliance by taxpayers. Both the Central and State Governments are constantly making efforts to resolve contentious issues through discussions in the GST Council meetings. So far 49 meetings of the GST Council have been held and all decisions except one have been taken by consensus between the Center and the States, which is a classic example of cooperative federalism. Good and Simple Tax has successfully completed six years. It will grow further and make India’s indirect tax regime more successful in the years to come.

Rajeev Kapoor is an Indian Revenue Service (Customs and Indirect Taxes) officer and currently Principal Additional Director General in the Directorate General of Performance Management.

These are the personal views of the author.

Updated: June 30, 2023, 02:57 PM IST