An image of GST Bhavan in Delhi.
Credit: X/@ANI
New Delhi: Think tank Global Trade Research Initiative (GTRI) on June 21 suggested a host of reforms like increasing GST exemption limit for firms with up to Rs 1.5 crore turnover, reducing the number of slabs, and doing away with state-wise registration to make GST more efficient, business-friendly, and contributing to economic growth.
As the implementation of Goods and Services Tax (GST) celebrates its 7th anniversary, having launched on July 1, 2017, it has become the world's largest platform for indirect taxes with over 1.46 crore registrations, GTRI said.
In FY24, GST collections reached Rs 20.18 lakh crore ($243.13 billion), with 29.85 per cent from imports, 26.92 per cent from inter-state supplies, and 43.23 per cent from within-state supplies.
The dominance of within-state supplies highlights the need to simplify GST rules to promote inter-state trade, the global trade research body said.
GTRI also suggested increasing the GST exemption limit for firms with annual turnover of up to Rs 1.5 crore from existing threshold of Rs 40 lakh .
This will be transformative for MSME sector, promoting job creation and growth, GTRI said.
Firms with less than Rs 1.5 crore turnover make up over 80 per cent of registrations but contribute less than 7 per cent of overall tax collection.
A yearly turnover of Rs 1.5 crore equals Rs 12-13 lakh monthly turnover, translating to just Rs 1.2 lakh at a 10 per cent profit margin, it said, adding, the new limit would reduce the GST system's load from 1.4 crore taxpayers to less than 23 lakh, allowing for the introduction of invoice-matching for 100 per cent compliance, eliminating fake invoices and tax theft.
Increased tax collection will offset the 7 per cent tax loss, GTRI said.
It also suggested that reducing GST on basic food items, healthcare services, and educational materials can make these necessities more affordable, encouraging higher consumption. Tax collection on these is insignificant.