The Goods and Services Tax (GST) Act, 2017 marks its eighth anniversary on July 1. Over the years, despite facing numerous challenges, GST has proven to be a resilient and transformative reform in India’s indirect tax landscape. The consistent and robust monthly tax collections stand as testimony to its success.
In May, the GST collection stood at Rs. 2.01 lakh crore, reflecting a 16.5% by y-o-y growth. April recorded the highest ever monthly GST collection of Rs. 2.37 lakh crore, representing a 12.6% increase over the previous year. The corresponding surge in the generation of e-invoices and e-way bills underscores the increasing digitalisation of the country’s indirect tax administration and the growing compliance among businesses.
India now ranks as the fourth largest economy in the world in terms of nominal GDP. According to the World Bank’s Global Economic Prospects (GEP) report, the country’s economy is projected to grow steadily at 6.7% in both FY26 and FY27. As the economy expands, tax revenues are expected to rise proportionately.
However, as the economy scales up, the indirect tax administration must introspect and evolve to meet the dynamic needs of the business community. There is an urgent need to rationalise GST rates and simplify the legal and procedural framework. A starting point could be the streamlining of the registration process to enhance ease of doing business and ensure compliance. The integration of the recently developed GIS mapping tool by the surveyor general of India with the GSTN registration module can help mitigate the issue of fraudulent registrations.
Furthermore, leveraging widely used digital platforms such as WhatsApp for basic services like checking registration status, making tax payments, filing NIL returns, checking refund statuses, registering grievances, and providing feedback can significantly improve user experience. The Andhra Pradesh government has already initiated a pilot project with Meta to offer over 400 services via WhatsApp, serving as a model for broader implementation.
For a more effective and people-centric administration, emphasis should be placed on voluntary compliance rather that enforcement. Establishing dedicated ‘nudge units’ within the tax department similar to the Behavioural Insights Team (BIT) in the UK can help study taxpayers behavior and develop strategies to encourage timely compliance.
A holistic approach also requires attention to the well-being and motivation of tax officials. These nudge units could also focus on behavioral aspects within the bureaucracy to ensure a supportive work environment. Adequate infrastructure, rationalised workloads, and recognition of officers’ roles are essential to maintaining a responsive and agile tax administratino.
Prime Minister Narendra Modi, during the 10th Governing Council Meeting of Niti Aayog, emphasised the need to focus on tier-II and tier-III cities as emerging growth centers. Deloitte’s Powering Consumption Growth: India’s Home and Household Market’ report reinforces this view, projecting that India’s household market will grow to $237 billion by 2030. The growth in these cities is driven by urbanisation, digital retail, rising disposable incomes, and younger consumers with evolving preferences. Tax administrators must proactively support small-town businesses to integrate seamlessly with the formal economy.
Evolving trends in Indian commerce including the growing use of closed networks like Telegram, WhatsApp groups, and Instagram for high-value transactions require a modern approach. Memorandums of Understanding (MoUs) with such platforms can help generate actionable intelligence to curb tax evasion. Integrated command and Control Centers (ICCC) and its surveillance capacity setup under Smart City Mission may also be leveraged for identification of tax evasion prone areas.
Moreover, better use of data from gig economy platforms is imperative for understanding consumption trends. The B2C segment remains a challenge for tax enforcement. Initiatives such as the ‘Mera Bill Mera Adhikaar’ scheme have had limited success. A more data driven approach using AI to analyse consumption volumes, transaction patterns, and supply chains will yield better results. Integrating GSTN data with other agencies like the MCA, Income tax department, tourism bodies, and state governments will provide deeper insights into the economic landscape.
The government’s ambitious AIRAWAT-AI initiative of IIT Kanpur, with a Rs. 300 crore corpus focused on urban analytics, presents an opportunity to develop AI use cases for GST. Similarly, the ministry of electronics and information technology’s BHASINI project can be integrated with GSTN to offer multilingual services and enhance accessibility.
AI can also be deployed to analyse grievance data, identify recurring issues, and recommend areas for targeted reforms whether administrative legislative.
To keep pace with rapid technological adoption, there is a need to reskill both taxpayers and tax officers. A dedicated digital learning platform, modeled on the Integrated Government Online Training (iGOT) portal or the National Urban Learning Platform (NULP) under MoHUA, could host user-friendly educational materials and video tutorials.
As India progresses towards becoming a $10 trillion economy, the role of indirect tax administration will be pivotal. The Deloittee GST@ 7 Survey highlights that taxpayer satisfaction has improved significantly, with 84% of respondent expressing a positive perception of GST in 2024 up from 72% in 2023 and 59% in 2022. Recent amendments to CGST Act such as the introduction of Section 74A, rationalisation of pre-deposits for filing appeals, amnesty scheme under Section 128A, and the introduction of track-and-trace mechanisms under Section 148, etc have been well-received.
It is imperative that such reformative steps continue, making the GST framework more intuitive, transparent, and business-friendly ultimately enabling a more compliant and robust tax ecosystem in the times of come. The dream of Viksit Bharat @ 2047 can be a reality only when tax administration and various organs of government would cater to the need of aspirational India.
(The writer is an IRS officer and worked in GST policy wing. The views are personal)
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