On July 1, 2024, India celebrated seven years of the Goods and Services Tax (GST) system. Since its implementation, GST has significantly transformed the business landscape in India, streamlining compliance and boosting tax collections. While challenges remain, particularly in combating tax evasion, the benefits of GST are evident in multiple sectors.
Simplified Compliance and Increased Revenue
GST has simplified the tax structure by merging 17 taxes and 13 types of cess into a five-tier tax system. This simplification has made it easier for businesses to comply with tax regulations, reducing the administrative burden and enhancing transparency. One of the significant outcomes of GST is the sharp increase in tax collection. This boost in revenue has benefited both the central government and the states, enabling them to allocate more funds for developmental projects and public welfare schemes.
Impact on Essential Commodities
The introduction of GST has resulted in a reduction of taxes on many essential commodities. For instance, the tax rate on common items like hair oil and soap has decreased from 28 percent to 18 percent. Similarly, taxes on electrical appliances have been slashed from 31.5 percent to 12 percent. GST has also exempted several essential goods and services from tax, including unbranded food items, certain life-saving drugs, healthcare, education, public transport, sanitary napkins, hearing aid parts, and agricultural services. These changes have made essential items more affordable for the general public, improving the overall quality of life.
Challenges of Tax Evasion
Despite the positive impacts, the fight against tax evasion continues. In 2023, the Directorate of GST Intelligence (DGGI) detected tax evasion amounting to over Rs 1.98 lakh crore. This included significant evasion in sectors like online gaming, casinos, insurance, and the import of manpower services. The DGGI’s efforts led to the arrest of 140 masterminds involved in defrauding the government exchequer. Fake invoices and fake GST registrations remain a challenge, highlighting the need for stricter enforcement and better monitoring mechanisms.
Future Prospects: GST Appellate Tribunal
The establishment of the GST Appellate Tribunal is expected to expedite the dispute resolution process, providing a faster and more efficient way to address grievances and disputes related to GST. This development is likely to enhance the ease of doing business in India further, as businesses will have a streamlined process to resolve their tax-related issues.
The implementation of GST has undeniably made business easier in India by simplifying compliance, reducing tax rates on essential commodities, and increasing government revenue. While challenges like tax evasion persist, the continued efforts of authorities and the establishment of mechanisms like the GST Appellate Tribunal promise a more robust and efficient tax system. As GST evolves, it holds the potential to further ease business operations and contribute to India’s economic growth.
