4 minute read 10 Aug 2022

GST Transformation - The Road Ahead

By Sudhir Kapadia

Partner, EY India Tax & Regulatory Services

Expert on taxation and its impact on the economy. Senior advisor on private equity, financial services, technology and entertainment. Passionate about travelling, swimming and watching movies.

4 minute read 10 Aug 2022
Related topics Tax Tax compliance

A more efficient GST can better enable India's march toward a $5 trillion economy.

In brief

  • Consistent uptick of the monthly GST collections suggest a remarkable progress.
  • Going forward the need to streamline and rationalize the five-tier tax rate structure, availment of input tax credits and inclusion of the remaining items in GST may be imperative.  
  • Any modern system of taxation also needs an effective, timely, and robust dispute resolution mechanism.

1 July 2017 was an epoch-making date in India’s history of tax administration. The journey towards ‘One Nation, One Tax’ in the form of a single Goods and Services Tax (‘GST’) saw many ups and downs over the fifteen-odd years prior to its successful culmination in 2017. No other country with a comparable size of economy and breadth of the market has ever attempted such a transformational change, and it is to the credit of the Government that it was able to forge a working consensus with opposition ruled states to get GST to at last see the light of the day.

From a tentative start, GST has now stabilized, both from a technology as well as from a collection perspective as seen in the consistent uptick of the monthly GST collections from an average of below INR 1 lakh crore per month in the initial three years.

The monthly GST collections have increased to

1.30 lakh

crore per month now

The time has now come to look back with satisfaction and pride on what has been achieved over the last five years and look ahead on what changes are necessary to streamline and rationalize the five-tier tax rate structure, availment of input tax credits and inclusion of the remaining items in GST.

Our book, GST Transformation - The Road Ahead, is an effort to capture the joys and challenges of this momentous journey whilst also incorporating critical feedback and recommendations from all key stakeholders of this tax reform.

Any modern system of taxation also needs an effective, timely, and robust dispute resolution mechanism.

The book draws out a detailed discussion of having a world-class dispute resolution system and how it can aid in ease of doing business. Decriminalization of minor offenses and providing forthright clarification on contentious industry (or trade) issues are some suggestions that have been presented.

While GST achieved many laudable objectives, any system of this size and complexity would need constant improvements with a focus on raising productivity and reducing prices. How can we make the GST more efficient and responsive to the needs of the businesses and Government?

This report focuses on three aspects in granular detail: 

Policy measures required to reform GST

Tax simplification measures

Addressing the challenges faced by the industry

Summary

As GST completes five years, it is time to look ahead to deliberate and decide on necessary changes required to streamline and rationalize the five-tier tax rate structure, availing of input tax credits, and inclusion of the remaining items in GST. We hope that this book initiates a healthy debate on how we can collectively make GST fit for purpose.

About this article

By Sudhir Kapadia

Partner, EY India Tax & Regulatory Services

Expert on taxation and its impact on the economy. Senior advisor on private equity, financial services, technology and entertainment. Passionate about travelling, swimming and watching movies.

Related topics Tax Tax compliance