India’s tryst with the Goods and Services Tax (GST), Launched with unusual fanfare in a midnight special Parliament session, it completes six years this month. Marking the occasion, Finance Minister Nirmala Sitharaman insisted GST has moved the country from a situation where each state had mandated separate indirect tax structures and procedures to a unified market, while inter-state borders were marked by barrier check posts, making logistics difficult. Costs increased and the competitiveness of Indian goods decreased. The GST introduced immediately after the shock of demonetisation was seen as Another disruptor to the informal economy And it took a while to sort out its initial technical, structural and procedural challenges. All businesses with an annual turnover of ₹5 crore will have to generate e-invoices from this August, and there has been no apparent response from small businesses, indicating that companies have slowly accepted the change. The revenue department’s crackdown on fake invoicing and other techniques adopted by tax evaders may force even some outsiders to toe the line.
Tighter compliance and a post-pandemic return to economic activity have helped improve revenue from the GST, which Ms Sitharaman suggested was abysmal in late 2021 when the Council decided to rationalize the cumbersome multiple rate structure. And a ministerial group was formed to increase the tax flow. , This June, GST revenue crossed ₹1.6 lakh crore, only the fourth such occasion in its 72 months of existence, taking the average collection in the first quarter of this year to nearly ₹1.7 lakh crore – the same as last year. 12% more than The recent revenue buoyancy, even though it may take a hit due to a slowdown in consumption growth amid a slowing global economy, bodes well for states that are expected to raise their taxes after the end of five years of assured revenue through GST compensation last July. Worried about fiscal capacity. However, for taxpayers and consumers, a lot remains to be done before GST can be considered a good, simple tax. Due to the transient shock of the COVID-19 lockdown on revenue, the GST Compensation Cess has been extended at least till March 2026 instead of the initial five-year tenure. Dispute resolution remains a problem for the industry, with GST Appellate Tribunals still not set up. There is no visible road map on rate rationalization or inclusion of excluded items such as electricity, petroleum and real estate, without which the efficiency gains from GST will be limited. The GST Council needs to meet more frequently and quickly convert its agenda into a to-do list.