Seven years after its historic implementation, the Goods and Services Tax (GST) stands as a cornerstone of India’s economic framework, heralding transformative change and solidifying its role as a pivotal fiscal reform. Let’s delve into the remarkable trajectory of GST and its far-reaching impact.
As of June 1, 2024, the GST ecosystem comprises 1.46 crore active taxpayers, including 15.1 lakh composition taxpayers. The period from July 2017 to May 2024 witnessed the filing of 57.98 crore GSTR-1 returns, 71.31 crore GSTR-3B returns, and 2.51 crore CMP-08 returns by these taxpayers.
The average monthly GST collections over the initial seven fiscal years (FY 2017-18 to 2023-24) reflected a robust trend, ranging from ₹89,000 crore to ₹1.68 lakh crore. The current fiscal year has already amassed a Gross GST revenue of ₹3.83 lakh crore, with the average monthly collection for FY 2024-25 at ₹1.91 lakh crore. The long-anticipated GST appellate tribunal is also set to be established, marking another significant milestone.
The adoption of E-invoicing has been noteworthy. From October 2020 to March 2024, a staggering 562 crore E-invoices were generated, with April 2024 alone accounting for 21.63 crore, a 24% increase from April 2023. Notably, 77% of taxpayers with turnovers exceeding ₹500 crore have adopted E-invoicing, and compliance is highest (83%) among those with turnovers between ₹100 crore and ₹500 crore. Even 78% of taxpayers with turnovers below ₹5 crore are generating E-invoices. In FY 2023-24, the leading sectors for E-invoicing were electrical machinery equipment, mechanical appliances, iron and steel, bullion and jewellery, and construction services. Enhancing compliance through gentle nudges could further streamline this process.
Similarly, from April 2018 to March 2024, 464.73 crore E-way bills were generated. April 2024 saw 9.66 crore E-way bills, a 14% increase from April 2023, highlighting the system’s stabilization and the trust it has garnered among taxpayers. This has facilitated ease of doing business and, through interventions based on E-way bill data, an additional ₹80 crore in revenue was collected in March 2024 alone from taxes and penalties.
Council Recommendations
The 53rd GST Council meeting brought forth pivotal recommendations, including changes in GST tax rates, measures to facilitate trade, and streamline compliance. A uniform 5% IGST rate on imports of aircraft parts and toolkits aims to boost Maintenance, Repair, and Overhaul (MRO) activities under specified conditions.
Additionally, several clarifications were issued to mitigate taxpayer difficulties and ensure clarity and uniformity in trade practices. Despite its progress, GST remains a dynamic system, with the Council open to suggestions from trade and industry for further simplification.
According to Deloitte India’s third edition of the GST@7 survey, confidence in the indirect tax reform has surged from 59% in 2022 and 72% in 2023 to 84% in 2024, advocating for progressive steps to elevate the regime.
This commendable performance sets the stage for potential reforms such as tax rate rationalization, easing credit restrictions, implementing a compliance rating system, addressing parallel or multiple proceedings, unlocking working capital, and resolving issues related to the inverted duty structure. Continuous simplification, technological integration, and capacity building are imperative to sustain this momentum.