Rising GST revenues need to be boosted further to meet government targets

While the increasing pool of revenue collected via the Goods & Services Tax (GST) is a promising sign for India, executives from the Big Four accounting and advisory firms believe that measures must be taken to accelerate growth in this domain. This is in light of the new administration’s revised goals.

The GST is among the flagship economic reforms that has been introduced in India in recent years. With the objective of making the entire taxation process more streamlined, the new tax created a unified taxation system for businesses across India. The tax was introduced in 2017.

Since then, businesses across the country have been scrambling to ensure compliance under the new tax regime, while the Big Four accounting and advisory firms have been offering support in this regard. Some consulting firms established specialised partnerships in anticipation of the oncoming demand.

A year on from its implementation, the GST appears to be thriving, as the total revenues drawn under the framework currently exceed Rs.1 trillion on a monthly basis for the last three months. The figures represent a 6% increase year-on-year in GST collections, which paints a promising scenario.

However, as the BJP administration begins its second term in power, the ambitions surrounding the GST have been amped up. The central government in India has set a new target for GST revenue collection for next year, which is 35% higher than what had been set earlier. 

As a result, the government is being urged to consider further reforms to make the collection system more efficient. “The stiff GST revenue targets for the current year would make it essential to consider further measures to plug revenue leakages and enhance revenues,” said Partner at Deloitte India M.S. Mani.

Pratik Jain, a Partner at PwC added, “While the collection has crossed 1-trillion mark, it’s only 2.2 per cent higher than average monthly collection of FY19. The government would need to explore immediate measures to garner more revenue or taper down the projection in the upcoming Budget.”

EY Partner Abhishek Jain added, “The normal continuing trend of collections above 1 trillion signifies the growth story of GST and also the reaping benefits of this new tax era. While the last two months had witnessed higher growth on account of year end collections, the increase vis-a-vis May 2018 signifies good growth.”