The Goods and Services Tax (GST) in India, implemented seven years ago, has been a transformative reform for the country's tax system. According to Deloitte's GST@7 survey, there is a growing sense of confidence among C-suite and C-1 level executives regarding GST. This survey, conducted across various industries through online platforms, reveals that in 2024, 84% of respondents view GST positively, a significant increase from 72% in 2023 and 59% in 2022.

Growing Confidence in GST

The survey indicates that a significant factor behind this rising confidence is the role of GST automation and technology in enhancing tax compliance. Technologies such as e-invoicing have streamlined processes, reducing the burden on businesses and ensuring more accurate tax reporting. This technological advancement, coupled with a consultative environment in policy-making, has created a more predictable and business-friendly tax landscape.

Calls for Further Reforms

Despite the positive outlook, executives also emphasize the need for further reforms to fully realize the potential of GST, often referred to as GST 2.0. The survey highlights several key areas needing attention:

1. Rationalizing Tax Rates: Simplifying the tax structure by rationalizing rates could eliminate anomalies and create a more uniform tax regime. This would enhance transparency and make it easier for businesses to comply with GST requirements.

2. Improving Dispute Resolution Mechanisms: Current dispute resolution processes can be cumbersome and time-consuming. Improving these mechanisms is crucial for fostering a fairer tax environment and reducing litigation costs for businesses.

3. Easing Credit Restrictions: Restrictions on input tax credit (ITC) are seen as a significant pain point. Easing these restrictions would improve liquidity for businesses, allowing them to invest more in growth and development.

4. Implementing Faceless Assessments: The move towards faceless assessments can reduce human intervention, thereby minimizing the potential for corruption and ensuring more consistent and unbiased assessments.

5. Liberalizing Export Rules: Simplifying and liberalizing rules related to exports can boost the competitiveness of Indian businesses in the global market, driving economic growth.

6. Establishing a Compliance Rating System: A compliance rating system could incentivize businesses to adhere to GST norms by rewarding compliant businesses with certain benefits, thus encouraging better compliance across the board.

The Role of GST Automation and Technology

The survey underscores the critical role that automation and technology play in the evolving GST landscape. E-invoicing, in particular, has been a game-changer, reducing errors and fraud, and ensuring timely tax payments. Automation tools have enabled businesses to streamline their tax processes, making compliance less burdensome and more efficient.

Consultative Policy Making

Another contributing factor to the positive perception of GST is the government's approach to policy making. Engaging with industry stakeholders and incorporating their feedback has led to more practical and effective tax policies. This consultative approach has built trust between the government and businesses, fostering a cooperative environment for implementing tax reforms.

Conclusion

Deloitte's GST@7 survey highlights a significant shift in the perception of GST among India's top executives. With 84% of respondents expressing a positive outlook, it is clear that GST has made substantial strides in becoming a cornerstone of India's tax system. However, the call for further reforms is a reminder that there is still work to be done. Rationalizing tax rates, improving dispute resolution processes, and easing credit restrictions are just a few of the areas that need attention to achieve the next phase of GST, often referred to as GST 2.0.

The survey's findings suggest that with continued focus on technology, automation, and a consultative policy-making environment, India can further enhance the efficiency and effectiveness of its GST system. This will not only improve compliance but also drive economic growth and stability, positioning India as a more attractive destination for business and investment.

As GST continues to evolve, the insights from this survey provide a valuable roadmap for policymakers and industry leaders alike. By addressing the identified areas for reform and building on the successes of the past seven years, India can realize the full potential of GST, creating a more streamlined, transparent, and business-friendly tax system for the future.

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