In an illuminating development for India’s fiscal landscape, a recent survey by Deloitte reveals a remarkable surge in confidence towards the Goods & Services Tax (GST), with 84% of respondents expressing positive sentiments in 2024, up from 72% in 2023. This data surfaces as the GST regime approaches its seven-year milestone, underscoring a significant maturation in India’s indirect tax framework.
Mahesh Jaising, Partner and Leader in Indirect Tax at Deloitte India, articulates, “The optimistic outlook is indicative of enhanced supply chain efficiencies, technological advancements, and consistent stakeholder engagement in GST policy. This sentiment paves the way for essential reforms, aimed at fortifying the regime’s robustness, dynamism, and responsiveness to taxpayer needs.”
Jaising further advocates for a comprehensive GST 2.0 overhaul, proposing the expansion of the tax base, rationalization of tax rates, elimination of Input Tax Credit (ITC) restrictions, liberalization of export services, and measures to unlock working capital. Addressing these operational compliance issues could significantly uplift the fiscal landscape.
Conducted in May, the survey engaged top-tier executives across diverse sectors via online platforms, encompassing 760 responses. Industries represented included consumer goods, energy, resources, industrials, life sciences, healthcare, technology, media, telecommunications, banking, financial services, and public sector entities. The 40-question survey, comprising multiple-choice and single-choice queries, aimed to gauge the industry’s stance on GST’s impact on business operations and regulatory compliance.
The survey’s findings spotlight critical reform areas, including the rationalization of tax rates, establishment of an efficient dispute resolution process, removal of credit restrictions, adoption of faceless assessments, liberalization of export regulations, and the implementation of a compliance rating system. These recommendations are anticipated to be focal points at the forthcoming GST Council meeting on June 22.
Among C-suite leaders, 88% identified audit and assessment challenges as areas necessitating ongoing simplification, technological integration, and capacity building. A significant 91% endorsed extending audit timelines to enhance issue resolution and compliance. Additionally, over 70% of respondents advocated aligning GST appeal pre-deposit requirements with pre-GST norms to streamline dispute resolution processes.
Supporting the Micro, Small, and Medium Enterprise (MSME) sector, the survey underscores the need for simplified GST registration through virtual verification and standardized documentation nationwide. Such measures could alleviate compliance burdens for MSMEs, bolstering their contributions to India’s economic growth.
An encouraging 78% of MSMEs expressed positive sentiments towards GST implementation in 2024, a notable increase from 66% in 2023. Furthermore, nearly 70% of respondents affirmed that quarterly return filings enhance compliance for MSMEs, with supply chain efficiencies highlighted as a key benefit by 70% of MSME respondents.
“MSMEs are calling for key initiatives such as paperless invoicing and uniform registration guidelines to significantly ease compliance burdens,” Jaising notes. “Challenges with the matching concept have seen a substantial reduction, from 64% in 2023 to 37% now, indicating improved streamlining in this area.”
As India looks forward to the next phase of GST evolution, these insights from Deloitte’s survey offer a comprehensive roadmap for fostering a more efficient and equitable tax system, driving sustainable economic growth.