The goods and services tax (GST) has matured beyond its infancy since implementation in July 2017. It has overcome many of the initial challenges and has evolved into a transformative regime. The positive impact of GST has been acknowledged by 84% of the respondents of the GST@7 survey conducted by Deloitte based on the following: adoption of technology including e-invoicing; enhanced financial and supply chain efficiencies; enhanced stakeholder consultation by the government; and removal of legal ambiguities through timely clarifications.

Based on the above, it is no surprise that 73% of the respondents cited competitive pricing to be the greatest operational benefit; 78% of micro, small and medium enterprises also endorsed GST.

While there is an overwhelming affirmation of the GST law, the industry has also urged the government to: address challenges around audits; implement an effective dispute resolution mechanism; rationalise GST rates (including removal of inverted duty structure [IDS]); promote exports by liberalising export rules; unlock the working capital; and remove restrictions on input tax credit (ITC).

In backdrop of these demands, attention is drawn to the announcements made in the recent 53rd GST Council meeting. Some of the announcements address these demands highlighted in the survey: an amnesty scheme waiving off interest and penalty; extension of time limit for availment of ITC; issuing sector-specific clarifications; and issuing clarifications to address revenue neutral cases.

The stage is set to embrace measures to infuse new vigour into GST.

In the survey, 88% respondents sought more structured audits and adjudication where uniform audit checklist, guiding trade on documentation, and procedures are followed in GST; audits are handled by officers with sector-specific expertise and concluded in a timely manner. Introduction of faceless assessment is also a key ask.

The survey indicates that 87% respondents seek a more effective dispute resolution mechanism including guidelines on arresting multiple proceedings. An absence of a GST Appellate Tribunal has led taxpayers to approach high courts, adding pressure on an overburdened justice system. Hence, a tribunal is soon required. The GST Network is be deployed to aid seamless digital continuity for efficient dispute resolution.

While the GST Council has rationalised rates of certain goods and services, 79% respondents emphasise the need for rate rationalisation including addressing IDS by facilitating refund of capital goods and services. Also, 70% participants advocate for liberalising rules for export of services. GST law should support the demand by ensuring that export of services is not taxed as intermediary or on-performance basis. This will arrest the flight of investment to other countries.

The Central GST (CGST) credits are maintained and utilised registration-wise, whereby excess credit in one registration cannot be used by another with the same PAN. With CGST being accounted for and maintained by the Centre, it should consider a transfer of CGST credits among distinct persons ensuring credit optimisation.

In the survey, 86% of the respondents seek removal of ITC restrictions under Section 17(5) of the GST Act, specifically the ITC restriction qua development of commercial infrastructure and employee-related expenses. The government should look to remove ITC restrictions as long as the expenses are used for taxable output supply.

The government should expand the levy of GST on items such as petroleum products and electricity, which are outside its ambit, as non-levy of GST on these items has led to cost inefficiencies. The GST Council could consider including natural gas and aviation turbine fuel first. Then, other products like petrol and diesel could be included.

As GST completes its seventh year and with stakeholders’ growing confidence in the regime, it is essential to focus on further strengthening the features that have contributed to its success and aim to make it more efficient.