Home / Politics / Policy /  Tax reforms in four years of Modi govt: GST makes tax evasion tougher
Back

New Delhi: India’s biggest tax reform since Independence of replacing a convoluted indirect tax system at Union and state levels with a simpler code and dismantling regional trade barriers to create a single $2.6 trillion market succeeded in its broad objectives, but with inevitable disruptions.

The goods and services tax (GST), which was rolled out last July, added more indirect taxpayers, made tax evasion difficult, brought tax transparency to consumers and reduced the tax rates on many mass-use goods and services. However, it unexpectedly led to a disruption in economic activity in the months before the rollout as businesses cut down production as they adjusted to the new system. This led to economic growth slowing to 5.7% in the April-June quarter of 2017-18 from 6.1% in the previous quarter. Growth subsequently recovered to 6.5% in the September quarter and 7.2% in the December quarter.

ALSO READ: How NDA went from 8 states to 20 in four years of Modi government

Businesses also found it hard to file GST returns on time as the technology platform of GST Network, or GSTN, could not cope with the last minute surge in filings, forcing several deadline extensions.

The GST returns filing procedure initially designed with the intention of preventing tax evasion was relaxed several times for the benefit of vast majority of honest taxpayers. A further simplification of returns is around the corner aimed at making compliance easier.

Simplifying procedures to encourage compliance, bringing petroleum products into the GST and eventually converging the 12% and 18% tax rates remain the tasks ahead for the GST Council. Revenue collection is expected to improve when compliance improves. At present, 70% of registered regular assessees file monthly GST returns.

ALSO READ: The Narendra Modi lexicon, updated list

ABOUT THE AUTHOR

Gireesh Chandra Prasad

Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
Catch all the Politics News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less

Recommended For You

Trending Stocks

×
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout