7 Years of GST in India – Retrospective Purview & Future Pathway

India’s Goods and Services Tax (GST) will mark a significant milestone on July 1, 2024, as it completes 7 Years of GST in India since its implementation.

This reform has transformed our indirect tax system, proof in points—impressive GST collections exceeding INR 20.14 trillion in the fiscal year 2023-24. This strong performance highlights India’s economic resilience and also leads us to a future growth roadmap.

GST reforms have brought the entire nation under an umbrella while reducing indirect tax burdens by clearly defining the GST rates. Not only that, but the tax base of GST has more than doubled. The average monthly gross GST collection has hit a record high, reaching ₹2.1 lakh crore this year’s April month.

Implementing GST has resulted in supply chain optimisation, eliminating tax arbitrage and octroi. This has led to dismantling check posts at state and city boundaries.

Transformative Changes of 2023 By GST Council

1. GST Drive For Fraud Detection

With 7 years of GST in India, GST network (GSTN) took the major initiative to crack down on identified entities engaged in dubious transactions. This underlines the government’s commitment to combatting fraudulent practices in GST transactions. The results were eye-opening, with the detection of 29,000 firms ₹44,000 cr GST evasion cases of fake invoices.

2. 28% GST on the Gaming Industry

One of the big debates that continued all round the year was introduction of 28% GST on gaming industry.

3. Constitution of GST Appellate Tribunal (GSTAT)

The government established the Goods and Services Tax Appellate Tribunal to handle appeals against decisions made by the Appellate Authority or the Revisional Authority. This can b considered as a GST milestone for this year. With the tribunal’s principal bench in Delhi, the Union Minister is keen on setting the tribunal sooner.

In the 53rd GST Council Meeting, a 3-month period was given for admitting appeals to the bench, but still, many clarities are pending as to the procedures. Nonetheless, this is a great step by the government to strengthen our GST dispute resolution mechanism.

4. Biometric-based Aadhaar Authentication

Biometric-based Aadhaar authentication for GST registration rolled out nationwide in phases through GST Suvidha Kendras.

5. New GSTR-1A Introduced

The introduction of GSTR-1A, a new form, allows taxpayers to amend or add details to their GSTR-1 for the current tax period/IFF for the first and second months of the quarter before filing GSTR-3B.

What Have Been The Biggest Performers

• Technology Takes the Lead This Year

GST mandate has opened avenues for Indian businesses and companies to explore and improve compliance processes via new technology. More stress is being placed on adopting and leveraging tax technology. Compliance automation is an emerging trend, with the C-suite understanding the advantages of it.

• Enhanced Financial and Supply Chain Efficiencies

Leveraging the benefits of GST, the logistics and supply chain industry has profited maximum from the GST mandate by leveraging the e-invoicing and e-way billing processes.

• Removal of Ambiguities Through the Issuance of Clarifications

Over the past seven years, the government has actively worked to remove ambiguities related to GST through the issuance of various clarifications and amendments. This proactive approach has helped businesses better understand and comply with GST regulations. This has not only improved compliance but also increased the confidence of businesses in the GST regime.

• Enhanced Stakeholder Consultation by the Government

The government’s emphasis on engaging with stakeholders, including businesses, industry associations, and tax professionals, to gather feedback and suggestions improved the GST system. This collaborative approach ensured that the concerns and needs of different sectors were considered when formulating policies and making amendments.

• Clarity Around Regulatory Guidelines

Over the years, the government has worked diligently to clarify regulatory guidelines related to GST. This includes issuing detailed notifications, circulars, and FAQs addressing specific issues and providing guidance on various aspects of GST compliance.

The Future Pathway

As India is ready for its next GST enhancement phase, there is still an enormous scope of improvement in our indirect tax compliance.

1. Rationalisation of GST Rates

There is a need to rationalise GST rates across sectors, focusing on removing inverted duty structures. We should aim to balance revenue considerations with the ease of doing business, promoting a more straightforward and predictable tax environment.

2. Measures to Improve Dispute Resolution

The current dispute resolution process can be lengthy and cumbersome, often leading to prolonged litigation. Introducing measures to expedite dispute resolution will reduce the burden on businesses and the judiciary, promoting a more business-friendly environment.

3. Removal of Input Tax Credit Restrictions

Various restrictions and conditions on availing ITC have created challenges for businesses, impacting their cash flow and increasing compliance costs.

4. Unlocking of Working Capital

The GST system has repeatedly locked up working capital due to refund delays and cumbersome procedures. Structuring and easing the refund process and ensuring timely disbursement of GST refunds will free up significant working capital for businesses. This will enable them to reinvest in growth and other operational processes.

5. Introduction of Faceless Assessment

Faceless assessment will be a transformative step towards complete transparency and reducing human intervention in the tax assessment process. By leveraging technology, faceless assessments will minimise biases and ensure uniformity. This approach will reduce the scope for corruption and increase taxpayer confidence in the system.

6. Vendor Compliance Rating

Introducing a vendor compliance rating system can incentivise better business compliance and accountability. This rating system would evaluate vendors based on their GST compliance history, encouraging them to maintain high compliance standards. This system will help businesses make informed decisions when selecting suppliers and ensure a more compliant supply chain.

Future Blueprint – Towards a Better GST

India is undoubtedly making history with its GST mandate, setting an example of a unified tax system in the world’s most diverse country. It’s only natural for us to move ahead as we complete 7 years of GST in India and implement revolutionary reforms in our GST mandate.

This progressive approach will support sustainable economic growth and position India as a global leader in tax reform. It’s through this that our nation will continue the journey towards a better GST.