After almost six years of implementation, the GST seems to be settling in. There has been a steady improvement in collections after the pandemic subsided. This is not only due to the recovery in the economy but also due to better compliance with the tax due to improvements in tax administration. As the technology platform is firmed up, compliance has improved as there is better detection of tax evasion through fake invoicing.
The record collection of Rs 1.87 trillion in April marks a new high in the monthly collections, and it is higher than the next highest collection of Rs 1.67 trillion in April 2022. Of course, the collections in the month of April tend to be higher as this actually reflects the business conducted in March, and a lot of year-end clearing and settlement is concluded. The collection of revenue in April this year is higher than last year’s by 12%. Considering the revival of economic activities, there are reasons to believe that revenue collections in the succeeding months would be significantly higher than the corresponding months of the previous year. Although it will take time and significant second-generation reforms to make GST really a “money machine”, as it has happened in many countries, the reform is settling down and holds promise.
Considering the elevated levels of fiscal deficit and public debt, the second-generation reforms in GST should be initiated sooner than later. Reforms are best done when economic recovery is under way and revenues are becoming more and more buoyant.
Read more at : DECCAN HERALD
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