Four years of GST in India: What businesses need to know

India recently commemorated the 4th anniversary of its Goods and Service Tax (GST). This tax replaced and subsumed 11 different indirect taxes under one unified tax structure. Not only did GST help transform the country into a unified marketplace, it also changed the existing source-based tax structure into a destination-based tax structure and, most notably, helped foster better penetration of markets.

The US–India Strategic and Partnership Forum highlighted the urgent need to streamline the indirect taxation system in India. In response to constructive feedback, India spent much of the last four years bringing about changes in taxation policies, including the introduction of e-way bill generation in a bid to keep a check on tax evasion and overcome logistical challenges.

Later the country announced the eagerly awaited e-invoicing system under the GST framework. This practice will help expedite invoice authentication and facilitate invoice matching for the accurate calculation of taxes. India is also looking into the use of artificial intelligence to curb tax evasion, which includes the integration of FASTag, an electronic toll collection system operated by the National Highway Authority of India, to the supply chain mechanism.

Although it is important that shortcomings are swiftly resolved, it also needs to be understood that it takes time to reap the benefits of such a mammoth structural change. The law is still a “work-in-progress”, and the process of evolution in such a complex journey cannot be eliminated. The new India is confident that the Government will continue to take measures to deliver on its promise of a “Good & Simple Tax” in the years to come.

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