• Notification Date: 05-07-2023
• Notification No: N/A

GST Regime requires Urgent Reforms to ease Tax Compliance and Boost States’ Incomes

With India’s Goods and Services Tax (GST) having completed six years Saturday, taxation experts say that while revenue from the indirect tax system has been growing robustly, there is a need for a few urgent reforms. These include easing the process by which people can appeal against orders by tax authorities, and bringing in at least some petroleum products within the ambit of GST. 

The government Saturday also announced the GST collections for June 2023, which came in at Rs 1.61 lakh crore — the third highest since the indirect tax was implemented. 

GST came into effect on 1 July, 2017, overhauling the previous indirect tax regime and subsuming multiple central and state-level taxes within itself. This was a major taxation reform. Not only did it create a single tax rate for any commodity across the country but it was also considered a stepping stone to significantly bolstering tax revenue for the government while also easing the compliance and tax burden on individuals and businesses. 

While analysis of the collections under GST show that revenue has grown steadily, experts say that key reforms such as the setting up of tribunals that can handle appeals against orders by the tax authorities are urgently needed. Experts also say that exclusion of petroleum products from the tax regime is leading to higher costs in almost every industry in the economy.  

Apart from these glitches, tax experts unanimously agree that GST has led to a lowering of costs and has improved efficiency across the economy.  

“When you reflect back on six years of GST, it is evident that it led to a significant structural simplicity, which in turn has resulted in savings in costs for industry and logistics efficiencies,” Pratik Jain, partner at PwC India and an expert in indirect tax, reported. “With the buoyancy in collection over the last few months, it seems that compliances are also getting streamlined with a huge thrust on the digital ecosystem.”