India Inc. calls for second phase of GST reforms for ease of doing business, says Deloitte survey

The Goods and Services Tax (GST) will mark its sixth anniversary on July 1, 2023.  In the last few years, the Centre was successful in consolidating indirect taxes under the GST regime that stirred the economy and boosted compliance. The tax, which is levied on the supply of goods and services, is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. GST is a single domestic indirect tax law for the entire country. 

Looking at the progressive momentum of the GST regime, India Inc. has said that the time has come to unleash the next phase of reforms in indirect tax administration to enhance the ease of doing business in the country, which can give a greater push to India’s growth story.  

A survey by consulting firm Deloitte India on Tuesday said 80 per cent of business leaders in India have expressed that the time is ripe for the next phase of GST regime reforms for enhanced ease of doing business (EoDB) and sectoral growth in the next few years.  

“India Inc. is very positive towards the changes facilitated by the GST regime and the increasing supply-chain efficiencies. India Inc. continues to look forward to the continued promotion of EoDB reforms, working capital rationalisation, and reductions in input tax restrictions. The 22 per cent YoY growth in GST revenue is testimony to the overall economic development and tax-payer-centric administration,” said Mahesh Jaising, Partner and Leader, Indirect Tax, Deloitte India.  

 He added that the Deloitte survey points to a positive impact on businesses of all sizes with Micro, Small and Medium Enterprises (MSMEs) being the biggest beneficiary of the simplified tax regime. “About 88 per cent of MSME respondents have acknowledged the reduced cost of goods and services, attributing it to the improved uniformity of the GST regime,” said Jaising. 

To boost economic progress and create a conducive business environment, the Centre could introduce additional measures for MSMEs in the country, granting them an opportunity to avail of input tax credits on invoice receipts and relaxing corresponding requirements to further reduce the cost and compliance burden. 

Jaising added: “While the sentiment towards the GST regime remains positive across businesses in India, and in fact better than our survey last year, there is a push to dispel legislative ambiguities around input service distribution vs. the cross-charge mechanism, self-supplies, and deemed valuation to ensure uniformity in the taxation system.  

“We also found an inclination towards export rule liberalisation under the GST law with 78 per cent of respondents citing it as the most-needed impetus, followed by unlocking working capital, removing ITC restrictions, and the removal of “deemed supply” provisions,” he further said.  

The survey has found that business leaders across industries have been quite appreciative of the transformation brought in by user-friendly tech engines, such as GSTR 2B, sequential return filings, the timely transition of e-invoicing data, and the GST portal.  

However, the Centre must resolve current issues and demands, particularly those that are revenue neutral, to fully realise the benefits of the GST regime in India. 

In May, GST revenue collected rose 12 per cent on an annual basis to Rs 1.57 lakh crore. The Finance Ministry reported the GST collections for the month of April 2023 at Rs 1.87 lakh crore, the highest ever. "GST revenue collected in the month of May, 2023 is Rs 1,57,090 crore of which CGST is Rs 28,411 crore, SGST is Rs 35,828 crore, IGST is Rs 81,363 crore (including Rs 41,772 crore collected on import of goods) and cess is Rs 11,489 crore (including Rs 1,057 crore collected on import of goods)," said Ministry of Finance in a statement. 

"Monthly GST revenues more than Rs 1.4 lakh crore for 14 months in a row, with Rs 1.5 lakh crore crossed for the 5th time since the inception of GST," said the ministry about the May collection. GST collection in May last year was about Rs 1.41 lakh crore. 

"During May, revenue from import of goods was 12% higher and the revenues from domestic transactions (including import of services) are 11% higher than the revenues from these sources during the same month last year," the ministry added. 

On Friday, Finance Minister Nirmala Sitharaman called for tightening the registration process for entities in the Goods and Services Tax (GST) regime in order to keep out “fake” firms, some of which had even resorted to “identity theft”.   

While taking stock of the two-month drive by the Central Board of Indirect Taxes and Customs (CBIC) against fake billing done with the aim of evading GST dues, the Union Minister was informed that as many as 11,140 “fake registrations” had been identified already, and action initiated against them. 

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