The Centre and state governments are preparing to focus on expanding the Goods and Services Tax (GST) taxpayer base and improving tax compliance following the completion of recent reforms to GST rates and procedures.
According to sources, the Centre presented its proposals at the recent GST Council meeting, highlighting the importance of bringing more businesses into the tax system and improving compliance to increase revenue collections.
The strategy includes encouraging new GST registrations, simplifying compliance requirements and improving tax reporting, particularly among businesses dealing directly with consumers.
GST Reforms May Encourage More Businesses to Register
The government expects that simpler compliance procedures and a lower perceived risk of dealing with the tax system could encourage more businesses to register under GST.
“There is an expectation that more people will now register for GST because of the lower compliance burden and reduced risk perception,” a person familiar with the development said. The source added that the system is increasingly designed around greater trust in taxpayers.
At present, approximately 16.8 million taxpayers are registered under GST. The government is looking to increase this number as part of its efforts to strengthen revenue mobilisation.
B2C Businesses in Focus as Government Seeks Better Compliance
Improving compliance among business-to-consumer (B2C) companies is another priority. These businesses sell goods or services directly to customers and are among the areas where the government sees scope for better tax reporting.
Sources said the number of businesses seeking to increase cash collections has grown, but the resulting tax revenue has not risen significantly. The value addition reported by these businesses also appears relatively limited.
Officials are therefore looking at ways to encourage businesses to report transactions more accurately and generate invoices regularly. The aim is to improve compliance while keeping the process manageable for taxpayers.
B2C Invoicing App Planned From April 1, 2027
As part of these efforts, states will be given access to a B2C invoicing application from April 1, 2027. The app, available through the GST Network (GSTN) portal, will allow businesses to generate electronic invoices and support better reporting of transactions.
The government is also considering whether incentives could encourage wider adoption of e-invoicing. One proposal discussed by sources involves examining whether businesses that follow invoicing requirements could receive a more facilitative approach from tax officials in matters such as audits.
The broader objective is to improve voluntary compliance rather than rely solely on enforcement measures.
GST Revenue Benefits May Take Time to Emerge
Expanding the GST taxpayer base and improving compliance are expected to require sustained efforts. According to sources, the impact of these measures on revenue collections may take at least a year to become visible.
The government’s focus is now shifting towards making the GST system more accessible to businesses while encouraging accurate reporting and broader participation in the formal tax system.
Disclaimer: This article is intended for informational purposes only and is based on the details provided in the report. Government proposals and implementation timelines may change. Readers should refer to official GST Council and GST Network announcements for confirmed updates.