As the goods and services tax (GST) completes two years today, we look at how the new indirect tax system has evolved. The GST has been one of the biggest tax reforms that the country has ever seen and despite early hiccups and teething problems, it has started to settle down well. Tax collections have been increasing and systems are getting streamlined.
Here are five indicators that tell the evolution story of the GST over the past two years:
Number of registered taxpayers: The number of registered taxpayers at the time when the GST was rolled out was Rs 65 lakh, which today stands at Rs 1.2 crore, a jump of 84 per cent over the last two years. This shows a significant widening of the tax base and formalisation of the economy under the GST.
Monthly collection: Monthly GST collections for July 2017, the first month for GST, was Rs 92,200 crore. Subsequently, it dropped to Rs 83,700 crore in November that year, the lowest monthly collection recorded. Collections started picking up from the second year onwards with July 2018 collections at Rs 96,500 crore. That was almost Rs 7,000 crore more than the average monthly collections in the first year. In 2018-19, the average monthly collection was Rs 97,100 crore with collections breaching Rs 1 lakh crore on a regular basis. The collection in May 2019 stood at Rs 1.03 lakh crore.
Compliances: After a slow start, the number of registered taxpayers who started complying with GST timelines, grew. For the first month (July 2017), only 38 lakh out of 68 lakh registered taxpayers had filed GSTR 3B returns by August 25. This figure has now almost doubled to 72.5 lakh by April 2019. E-way bill, an anti-evasion mechanism, came into existence from April 1, 2018. The number of e-way bills doubled from 2.8 crore in April 2018 to 5.49 crore in March 2019.
Rate rationalisation: When the GST rates were first formulated, over 200 goods were kept in the 28 per cent rate bracket. The number of goods under 28 per cent slab has been cut down to eight. There are other goods and services whose tax rates have been reduced. For example, GST on restaurant services has been brought down from 18 per cent to 5 per cent. GST rates on affordable housing projects have been reduced from 8 per cent to 1 per cent and on non-affordable housing projects from 12 per cent to 5 per cent.
Number of returns: When the GST was rolled out, there was a provision for three monthly returns - for sales, for purchases and a composite return - and one annual return. When businesses complained about huge compliance burden due to the requirement of 37 returns being filed in a year, the GST Council did away with the purchase return. Now businesses have to file two returns - GSTR1 for sales and GSTR 3B, a composite return.
The GST Council has now given a nod to a new system under which only one return needs to be filed from January 2020.