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Finance

5 Years Of GST: Check Out Hits And Misses Of The Indirect Tax Regime In The Last 5 Years

5 Years Of GST Check Out Hits And Misses Of The Indirect Tax Regime In The Last 5 Years

Highlights:

  • Over the past four years, the average monthly collections have increased from Rs 90,000–100,000 crore to Rs 1.20 lakh crore.
  • The introduction of digital tax payment system as a result of the GST has aided in the administration of taxes and tracking of tax evasion.

Five years have passed since the goods and service tax (GST) system went into effect on July 1, 2022, a Friday. At Vigyan Bhawan in New Delhi, today’s 5th GST Day festivities will be officially launched by Finance Minister Nirmala Sitharaman.

The unified direct tax system has so far been a hit-and-miss affair. Although the GST system wasn’t entirely successful, it also wasn’t a total disaster, as it was in Malaysia, which abandoned the tax three years after it was introduced.

The government’s 2017 aim of unifying taxation for the then-1.3 million taxpayers was achieved, however there were several tech glitches and issues with multiple filings during the initial implementation that have not yet been fully fixed.

Despite two deadly waves of the Covid-19 pandemic, tax receipts have shown record month-after-month increases, and the tax base has increased from 6.6 million to 13 million over the past five years.

Also Read: New TDS Rule From July 1: TDS On Crypto, Doctors & Influencers Need To Pay Tax On Freebies

The 2016 demonetisation exercise, the pandemic, Brexit, and the Russia-Ukraine conflict prevented the GST from increasing India’s GDP by the predicted 1-3 percent that the government had anticipated.

The Finance Ministry had projected a 14% increase in revenue, the rate given to states, however this did not happen. While the GDP has increased by 70% between the pre-GST years of 2016–17 and 2022–23, at current market prices, the corresponding expected rise in GST income is only 45%, from Rs 0.9 lakh crore monthly collections in 2016–17 to projected Rs 1.3 lakh crore collections in 2022–23.

Despite the promise of a “unified” tax system, there are several tax slabs, the exclusion of petroleum, and technical issues with the tax portal, in addition to the highest tax slab of 28% and compensation cess on some items.

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Kumkum Pattnaik
Kumkum’s knack for scrutiny coupled with her passion to serve quality content, has been a constant motivator for her to pursue content writing. In addition to being a ferocious researcher and an inquisitive soul, she firmly believes in making a difference in people’s lives with her articles. When she isn’t scanning the web amassing information, she loves to indulge in yoga or head out for a quick run.
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