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Jul 01, 2024
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GST simplified compliance, improved tax buoyancy; fake ITC generation still a challenge
Introduced seven years ago, the Goods and Services Tax (GST) has simplified compliance, improved tax buoyancy and increased states' revenues, but fake invoices and fraudulent registration remain a big challenge for policymakers trying to curb tax evasion.
Rolled out on July 1, 2017, Goods and Services Tax (GST) streamlined 17 taxes and 13 cesses into a 5-tier structure, simplifying the tax regime. The turnover threshold for registration rose to Rs 40 lakh for goods and Rs 20 lakh for services (up from Rs 5 lakh on average under VAT). GST also reduced 495 different submissions (challan, forms, declarations, etc) across states to just 12.
In seven years, the number of registered taxpayers has risen to 1.46 crore from 65 lakh in 2017. Average monthly GST revenues, soared from around Rs 90,000 crore in 2017-18, to about Rs 1.90 lakh crore in 2024-25. According to the government data, GST has improved tax buoyancy from 0.72 (pre-GST) to 1.22 (2018-23). Despite compensation ending, state revenues remain buoyant at 1.15.
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