The last six years of implementing GST (Goods and Services Tax) have brought phenomenal changes to the way India administers Indirect Taxes. GST was launched on July 01, 2017, and has since paved the way for the most significant taxation reform since independence. The complex and multifarious system of state/UT level taxation in the VAT regime gave way to one single tax under GST. In the initial years, GST faced difficulties as traders found it to be more complex due to its digital-centric nature. However, by the end of the sixth year, the acceptance and appreciation for GST have grown manifold among Indian taxpayers. GST is reshaping Indirect Taxation with the help of digital technology like e-Way Bill, e-Invoice, etc. The implementation of GST from Registration to Refund, Recovery to Rectification, Return filing to Adjudication is happening online through GST Network (GSTN). Major milestones of GST are presented in the following image and later explained in detail.

One Nation One Tax

GST subsumed 17 taxes and 30 cesses implemented in States and UTs before 2017, bringing about a “One Nation, One Tax” reform. Its foundation lies in the strong digital infrastructure created through the Goods and Services Network (GSTN). Before the implementation of GST, the market in India appeared as if goods and services were traded between different countries due to a multitude of taxation in different jurisdictions and restrictions imposed due to border check posts, chungi, octroi, etc. Today, India has become one market, and the movement of goods happens seamlessly through the e-way bill system.

GST Network (GSTN)

From registration to return filing and e-payment, GST allows all taxpayer-related services through one single platform, i.e., the Goods and Services Tax Network (GSTN). The same platform provides for e-invoice generation via the authorized invoice registration portal (IRPs). GSTN is a shared IT platform for all GST stakeholders and all tax administration systems of the center as well as states. As a result, tax regulation-related functions like cancellation of registration, rectification of returns, approval/rejection of refunds, scrutiny, etc., also happen through GSTN. It is also an effort of the government to integrate the Income Tax data with GST for better compliance and timely tracking of evasion. The Business Intelligence and Fraud Analytics (BIFA) tool has strengthened the arms of tax administrators with the force of data analysis that is fair, transparent, and free from bias. Today, GSTN provides a robust digital infrastructure for handling millions of transactions per day in a seamless, faceless, and transparent way.

Enhanced Tax Base

The success of this historic tax reform in achieving its desired objectives can be gauged from the fact that we now have 1.43 crore registered taxpayers as of November 30, 2023. There were approximately 66 lakh taxpayers before the introduction of GST under the earlier tax regime. In simple terms, the tax base more than doubled from 2017, resulting in the widening of the tax base in the country. As of November 30, 2023, INR 122.32 crores of returns have been filed using the GSTN portal. The tax base under GST has almost doubled, and with increased self-compliance, it has resulted in enhanced tax collections too.

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Improved Collections

Under GST, the taxpayer has to file a monthly return online on the portal, whereas earlier multiple returns were required to be filed, differing from state to state, UT to UT, and even among cities due to Octroi/ Chungi, etc. This change has reduced the burden on compliances on the taxpayer. As a result, there is enhanced self-compliance under GST, which is also clear from the increased revenue collection. The gross GST revenue collected in November 2023 was INR 1,67,929 crore, slightly lower than the October 2023 collection of INR 1,72,003 crore. In April 2023, the GST collection achieved its all-time high receipts of INR 1.87 lakh crore. A bar graph of the monthly GST collections of the year 2023 proves that since April, GST collection has remained more than INR 1.5 trillion in every month, speaking of the buoyancy of the GST system.

E-Way Bill

E-Way Bill was launched in April 2018 by the GST Council, and e-Way Bill has been made mandatory for Inter-State movement of goods of consignment value exceeding INR 50,000/- in motorized conveyance. Validation of the vehicle through the VAHAN system was introduced in March 2020. Later it was integrated with e-Invoice in October 2020, and automated generation of GSTR-1 was made possible. In January 2021, e-Way Bill was integrated with RFID. All these digital reforms have ensured multi-level inbuilt checks and resultant automated compliances. In the month of October 2023, the highest 10.3 crores of e-Way bills were generated through the e-Way bill portal. As of November 30, 2023, 416.76 crores of e-Way Bills have been generated through the portal. Today, the GST department uses e-Way Bill statistics for better compliances and timely tracking of tax evasion.

E-Invoice

The e-Invoice System was introduced in 2020 for uploading all the B2B invoices to the Invoice Registration Portal (IRP). As per the latest statistics, more than 150 crores of e-Invoices have been generated through IRP since the introduction of e-Invoice. This system has made billing interoperable across several software like Tally, SAP, etc., resulting in the direct fetching of data from the invoices, thereby eliminating errors. It also has resulted in better integration with return filing and sheds light on deviations that enable tax administrators to seek clarifications in time from the taxpayers. All this has resulted in more data-based regulation from the department and brought in transparency in an otherwise opaque system of earlier regimes.

Also Read | One Nation, One Tax: Inside Maharashtra’s High-Tech Strategy for GST Compliance

Satisfied Taxpayer

According to a survey conducted by Deloitte India titled “GST @ 6: An Insight into the sixth year of GST,” 72% of respondents recognized the positive impact of GST, up from 59% last year. This shows a significant leap in the streamlining of GST. We also have to appreciate that in 2020-21, the COVID pandemic had adversely affected the economy, and this also had an impact on GST acceptance. But now, with normalcy, GST taxpayer registration and collections are rising significantly month after month.

Conclusion

In a nutshell, there is growing acceptance and appreciation of GST among taxpayers, evident from the rising tax base and increased collections. Continuous efforts have been made by the government to streamline processes, plug leakages, and enhance tax administration through timely policy decisions taken in the GST Council. The Council has acted as an effective federal structure, and most decisions have been taken unanimously. Technological advancements like GSTN, e-Way Bill, e-Invoicing, BIFA, etc., have introduced transformative reforms in India’s indirect tax system and proved to be pivotal in changing the tax landscape of India. Digital Governance in GST has streamlined regulatory processes, enhanced compliance, improved transparency, brought accountability, and empowered tax authorities with valuable insights. It would be apt to say that GST has reshaped not just the Indian taxation system but also paved the way for the Indian economy by promoting digital payments.

Views expressed by: Nidhi Choudhari, IAS, Commissioner & CEO Skills, Employment, Entrepreneurship & Innovation Department & Maharashtra State Innovation Society.

Note: A month prior, she was serving as Joint Commissioner, Goods & Service Tax in the Department of Revenue, Government of Maharashtra.

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