The finance ministry said on Wednesday that more than 66 crore GST returns have been filed so far, with reduced tax rates helping to enhance compliance. The Goods and Services Tax regime has been in place for four years.
On July 1, 2017, a countrywide GST was implemented, incorporating 17 local levies such as excise duty, service tax, and VAT, as well as 13 cesses.
The ministry noted in a series of tweets that GST has made compliance easier for all taxpayers, and that the GST Council has recommended various trade-friendly clarifications in light of the Covid-19 pandemic.
Businesses having an annual turnover of less than Rs 40 lakh are free from GST. Those with a turnover of up to Rs 1.5 crore can also take advantage of the Composition Scheme, which requires them to pay only 1% tax.
Businesses with a yearly revenue of up to Rs 20 lakh are GST free for services. A service provider with a yearly turnover of less than Rs 50 lakh can use the composition plan for services and pay only 6% tax.
"It is now widely acknowledged that GST is both consumer and taxpayer-friendly. While high tax rates of the pre-GST era acted as a disincentive to paying tax, the lower rates under GST helped to increase tax compliance. More than 66 crore GST returns have been filed so far," the ministry tweeted.
Multiple markets across India, with each state charging a separate tax rate, resulted in significant inefficiencies and compliance costs. According to the ministry, GST compliance has been slowly rising, with around 1.3 crore taxpayers now enrolled.
The ministry said GST has cut the rate at which people must pay tax, tweeting with the hashtag '4yearsofGST'. "The revenue neutral rate as recommended by the RNR Committee was 15.3 per cent. Compared to this, the weighted GST rate at present, according to the RBI, is only 11.6 per cent".
The GST has simplified one of the most complicated indirect tax systems, which formerly required a corporation to make as many as 495 distinct submissions to do business in each state. That number has dropped to only 12, according to the report.
GST has replaced India's complicated indirect tax structure with a simple, transparent, and technology-driven tax system, bringing the country closer together as a single market.
“With the continuous simplification of procedures and rationalisation of rate structures so as to make GST compliance easy for common man as well as the trade, we have been able to achieve economic integration of the country with a humane touch," the ministry added.
A four-rate structure is imposed under GST, with a low rate of 5% on necessary commodities and a peak rate of 28% on autos. The other two tax brackets are 12 and 18 percent. In the pre-GST era, the total of VAT, excise, CST, and their cascading impact resulted in a consumer paying 31% in tax on average.
GST is also a first-of-its-kind exercise in fiscal federalism. The GST Council, which includes representatives from the federal and state governments, has convened 44 times to discuss the tax's implementation.