The Goods and Services Tax regime completed seven years of implementation on Monday. Besides standardising most tax rates across the country, GST has delivered gains in terms of higher tax revenues, according to experts.
Monthly collections under the regime have doubled to average over Rs 1.8 lakh crore over the last three months, compared with Rs 89,884 crore in the first year of implementation.
A paper by the National Institute of Public Finance and Policy (NIPFP) last year in April showed that the buoyance under the GST system since its implementation on July 1, 2017, was higher than five years prior to the regime.
According to a RBI study on State Finances, “robust growth in SGST has played a pivotal role in reducing the vertical fiscal imbalance between the Centre and the States in recent years.” The state collections from own tax revenues jumped to 65.4% of overall tax revenues in FY22 and FY23, which was higher than the 62.8% average achieved in the pre-GST period of FY16 and FY17.
The share of the centre’s GST revenue in GDP has also moved up to 3.3% in FY24 compared with 3.1% in FY19.
Experts indicate that buoyancy in collections has set the stage for the second stage of GST reforms.
“Some of these reforms could include easing working capital impact, rationalising GST rates, removal of ITC restrictions and implementing specific sectoral reforms, to correct challenges,” said Mahesh Jaising, Partner, Deloitte India.
“Industry stakeholders eagerly anticipate more streamlined GST audits & investigations, especially as the statute of limitations approaches its end for the initial years and in the backdrop of well drafted guidelines for investigations,” Jaisingh further added.
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