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3 Years of GST: How GST transformed compliance in India?

Blog: NASSCOM Official Blog

The Goods and Services Tax (GST), implemented on July 1st, 2017, completed its three years of operation. Considered to be the biggest reform in indirect taxes, GST combined (subsumed) almost 17 prevalent taxes into a single umbrella. Although introduced under the “One Nation, One Tax” slogan, the transition period was stressful for both the taxpayers and the government. But, the government has taken various measures overtime to stabilize the compliance process and resolve ongoing issues.

GST is still an ongoing process, as evident from the 40th GST Council meeting, which has made various amendments to the system. In India, the dual GST model has been adopted wherein the tax is levied concurrently by both the Central and State/UT governments on the supply of goods and/or services. The GST levied by Center is called Central GST (CGST), and likewise, State/UT GST (SGST/UTGST) is levied by the states/UT.

CGST & SGST/UTGST is levied on all taxable supplies within (Intra-State) a state. In the case of inter-state supply of goods And/or services, Integrated GST (IGST) is levied. The implementation of this indirect tax has provided multiple benefits to Taxpayer and consumers, including hassle-free compliance, simple tax structure, a boost in economic growth, and more.

Benefits of GST

Before the GST, businesses had to spend a lot of time complying with different rules and regulations of various tax departments. Fortunately, the cascading effect of taxes on goods and services has been eliminated with the implementation of GST, making it easier for businesses to expand their operations and increase revenue. The transparency in procedures and laws is also proven to increase the government’s monthly average revenue collection under the indirect tax. The traders and various industries are also enjoying a seamless flow of tax credit, stabilizing their cash flow.

Shortcomings in the GST regime

After the introduction of GST, there has been a steady rise in the offense of creating fake invoices to fraudulently claim an input tax credit (ITC). Such invoices are created by racketeers who do not carry out any business and issue invoices without the actual supply of goods and services. Due to the ongoing COVID-19 pandemic, any significant step for GST reform has come to a halt. Although multiple tax structures make it complex, restructuring of tax rates is difficult due to the decline in revenue. There have also been issues with transitional credit and input tax credit.

The way ahead for the indirect tax

The most crucial requirement has been the need to introduce fewer tax rates and consolidation of various circulars, notifications, orders in the law for a simple GST compliance. Presently, there are five tax rates. The government is already taking severe measures to put an end to tax evasion and bring efficiency into GST compliance. Businesses can utilize GST software solutions to help them overcome compliance challenges and make time to focus on their growth.


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