Explained: Nine years of GST - what a Deloitte survey reveals

As India completes nine years of Goods and Services Tax (GST) regime, global consultancy Deloitte Touche Tohmatsu India’s annual survey of senior business leaders across industries and company sizes, including micro, small and medium enterprises (MSMEs), finds that GST has gained near universal acceptance for improving transparency, accelerating digitalisation and enhancing business efficiency. The survey assessed the impact of next-generation GST reforms, including structural changes, rate rationalisation and ease-of-living measures and found that the next phase of GST regime should prioritise liquidity enhancement, simplification of Input Tax Credit (ITC) rules and reduction in working capital pressures. Let’s see why big companies as well as MSMEs back GST reforms and what more they are seeking...

What worked

Nearly 89% of respondents of the Deloitte survey favoured automatic payment of interest on delayed GST refunds and pre-deposits, while 88% supported invoice-based ITC eligibility. The quarterly tax payment mechanism was found to be good by 87%. Quarterly return filing has emerged as the most widely recognised GST reform among MSMEs, with recognition increasing more than fivefold from 12% in 2023 to 67% in 2026. Similarly, extension of registration threshold to inter-state supplies for goods and services was widely recognised by MSMEs, with consistently strong support across sectors, indicating its broad relevance across industries. Rationalisation of GST rates for composition scheme and providing single rate-based taxation also found increasing acceptance among MSMEs.

Challenges

Companies, mostly bigger ones had sector specific challenges under GST regime. For instance, pro-revenue approach in tax administration including expansive legal interpretations and invoking penal provisions routinely were quoted as the most significant concern for GCCs. Overlapping audits and assessments were highlighted as a key issue for the life sciences and healthcare sector. Intensive scrutiny, prolonged proceedings and litigation costs due to lack of sector-specific expertise, aggressive audit techniques for non-fraud cases and long-drawn proceedings, etc, were seen as audit challenges by large businesses. Even lack of understanding of new-age business models vis-à-vis registration provisions continues to be a challenge, the survey results show. For exporters, delay in refund caused by non-adherence to timelines, heightened scrutiny for realisation of proceeds and procedural requirements delay refund processing, is a major challenge.

What is needed

Since refund certainty emerged as the key theme, driven by processing timeline and procedural complexity concerns, timely refund disbursals emerged as the foremost priority. Simplifying export refund processes, including clarity on realisation requirements, documentation and timelines was the requirement of certain sections of businesses while reducing manual intervention and discretionary queries emerged as key reform priority for MSMEs. The need for a pan-India standardised list of registration documents and simplification and rationalisation of GST return forms (by streamlining data to reduce the disclosure requirements in Form GSTR-1, GSTR-3B) were highlighted. Businesses across sectors and tiers were unanimous in their demand for better clarity on blocked ITC, reflecting need to re-look at ITC provisions. Similarly, technology-driven sectors and larger enterprises call for an integrated, efficient GST framework for special economic zones (SEZs).

Next Gen GSTN

The survey indicates that stakeholders prefer tools that simplify compliance oversight and information retrieval on the GST portal. Integrated GST platform (e-invoicing, e-way bills and notice tracking), enhanced data retrieval for e-invoicing and e-way bills, portal performance improvement during peak filing and a unified dashboard – especially sought by MSMEs – were some of the specific tools preferred by the businesses. Some of Deloitte’s suggestions that received wide acceptance among the survey respondents include integration of tax type payment, removal of separate reporting requirements for e-way bills where e-invoices are applicable and a grievance redressal module with 24/7 dedicated support. While 89% of the respondents wanted intelligent data processing and reconciliation, 83% supported automated data extraction and validation, 76% wanted advanced data analytics and Management Information System (MIS) dashboards and 51% wanted a litigation tracking and dispute management function in the GSTN portal.