GST’s next big push: More taxpayers, better compliance and higher revenue

With rate and process reforms under the goods and services tax (GST) now complete, the Centre and states will look at ways to boost revenue by expanding the tax base and improving its quality.

According to sources, the Centre made a presentation to states at the recent GST Council meeting, highlighting the need to widen the GST tax base to mobilise revenue. This can be achieved by increasing the number of registrations and improving compliance.

“There is an expectation that more people will now register for GST because of the lower compliance burden and reduced risk perception. The system has now been designed to place greater trust in taxpayers. This is expected to widen the GST taxpayer base,” said a person familiar with the development.

At present, around 16.8 million taxpayers are registered under GST.

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Similarly, with a lower compliance burden, taxpayers may choose to disclose more, leading to better compliance. One focus area is the business-to-consumer (B2C) segment, particularly businesses seeking to increase cash collections. While the number of such companies has been rising, the revenue from them has not increased significantly, sources said, adding that the reported value-added component does not appear to be high enough.

From April 1, 2027, states will also be given access to a B2C invoicing app to encourage such businesses to generate invoices and improve compliance. Available on the GSTN portal, the app will enable these businesses to generate e-invoices.

“The focus has to be on encouraging compliance and providing incentives for it. For instance, could e-invoicing prompt tax officers to take a more lenient view of such businesses on issues such as audits?” sources said.

Measures to widen the tax base are expected to take at least a year to show results.