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GST@5 Survey 2022
June 2022
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 2
Contents
Introduction
• Objective and methodology
• Respondent profile
Executive summary
Survey findings
• Impact of GST
• Government initiatives
• Key issues/concerns
• Use of technology
• Industry expectations and future
proposals
01
02
03
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 3
Introduction
• Objective of the study
• Respondent profile
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 4
Introduction
• The aim of the study is to understand
the GST journey so far and help
organisations prepare for the future.
• The study focuses on assessing the
impact of GST across sectors as we
complete five years of the new tax
regime. Organisations may use these
insights as a guidance to plan their
future course of action.
• To understand how the tax journey of
organisations will evolve in the future,
primary research involving an online
survey of 234 CXO and CXO-1 level
individuals was done.
• The survey involving live users was
undertaken over a four-week period.
Industry type Annual turnover
25%
37%
38%
Less than INR 250 crore
INR 250–3,000 crore
Above INR 3,000 crore
20%
17%
14%
12%
14%
23%
Consumer
Energy, resources, and industrials
Financial services
Government and public services
Life sciences and health care
Technology, media, and telecommunications
N = 234
Objective
Methodology
Respondent profile
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 5
Executive summary
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 6
Executive summary
• GST, India’s biggest tax reform, was launched with the objective to streamline taxation and reduce compliance burden. Since its launch, the country has witnessed digitisation
in tax compliance and improved supply chain efficiencies.
• It is a tax regime founded on a technology-based monitoring system with e-returns, e-invoices, and e-way bills. It is also vital to recognise the effectiveness of the centre-state
collaboration under the auspices of the GST council, which has ensured policy implementation uniformly across states.
• Despite the scale of the COVID-19 crisis, the government and the industry have been agile in adjusting to the "new normal" and restarting economic activity. This survey
analyses the impact, efficiency, and future aspirations of the industry as India completes its fifth year of the GST regime.
Key impact and initiatives
• Overall outlook: The survey revealed that ~90 percent industry leaders view the transition to GST as largely positive. Factors such as competitive pricing of goods
and optimised supply chain have benefitted a majority of the companies.
• Measures for further impetus: The leaders observe that aspects such as unlocking working capital blockages, removing ITC credit restrictions, and rationalising tax
rates can provide impetus to the growth of their respective sectors.
• Automation and measures to boost Ease of Doing Business (EoDB): About 80 percent leaders believe that the government has done well in automating tax
compliances and should continue to work on simplifying the tax system to enhance the EoDB. About 59 percent also believe that the government has proactively
considered industry inputs and ensures timely issuance of GST circulars/clarifications/press notes on contentious tax issues.
Industry expectations
• Increased focus on EODB: The survey revealed that ~63 percent of the industry experts expect the government to implement changes to boost EODB.
• ITC legislative reforms: About 54 percent leaders urge the government to consider allowing conversion of accumulated input tax credit into tradeable scrips, cross-
utilisation of CGST credit across states, and use of credit across entities in a group structure. This move would significantly improve working capital management and
ease cash flows.
• Dispute resolution and litigation management: While significant improvement in technology-enabled compliance has taken place, the disputes under GST are still
at a nascent stage. Setting up of the GST tribunals across the country and evaluating a pan-India dispute resolution mechanism for companies to address situations
of differing views between states as well as between the centre and a state will go a long way and help expedite closure of GST matters.
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 7
Executive summary
Use of technology
• Regular updation and improvements: The government is progressively updating the reporting and compliance processes using emerging technologies and
automating key areas.
• Digitisation: About 38 percent industry professionals believe that the recent digitisation efforts by the government have been helpful while ~57 percent are of the
view that it was partially helpful. This is perhaps in anticipation of the long-term plan to introduce fully automated return filing.
• ERP automation: Perhaps due to the multiple changes in return filing formats and their contents over the past five years, GST has also ushered and hastened the
process of tax ERP automation. This leads to efficiencies in data management, compliance, and analytics.
Key challenges to be addressed
• Onerous input tax credit matching mechanism: The process of matching and reconciling ITC claims with auto-generated input tax credit data has increased the onus
on recipients and enhanced the risk of ITC disallowance in their hands due to default of their suppliers.
• Increased complexities and litigation: Multiple state-level audits of taxpayers and cross-empowerment have led to increased operational complexities and litigation
for taxpayers.
• Challenges in functioning of the advance ruling mechanism: Divergent rulings and absence of standardisation in rulings have also posed a major hurdle in making
tax decisions for industries under the GST regime.
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 8
Executive summary
Key themes Consumer Technology, media &
telecommunication
Energy, resources &
industrials
Financial services Lifesciences &
healthcare
Government &
public services
Impact Neutral to positive: ~83% Neutral to positive: ~91% Neutral to positive:
~90%
Neutral to positive:
~94%
Neutral to positive:
~91%
Neutral to positive:
~93%
Areas where government has
done well
Introduction of e-
invoicing/e-way facility
Automation of tax
compliances
Automation of tax
compliances
Automation of tax
compliances
Introduction of e-
invoicing/e-way facility
Introduction of e-
invoicing/e-way facility
Future priorities of government Unlocking working capital
measures
Unlocking working capital
measures
Unlocking working
capital measures
Removing restrictions of
input tax credits
Unlocking working
capital measures
Rationalising GST rates
for the entire supply
chain
Satisfaction with digitisation
efforts
Yes, with room for improvement
ERP hurdles Frequent changes in GST
functionalities
Tax technology process
improvements
Frequent changes in GST
functionalities
Multiple systems in the
organisation for
reporting and record
keeping
Tax technology process
improvements
Tax technology process
improvements
Key issues and concerns Keeping track of the
changing tax landscape and
developments
Overall input credit
management vis-à-vis GST
rules and restrictions, blocked
credit rules, etc.
Overall input credit
management vis-à-vis
GST rules and
restrictions, blocked
credit rules, etc.
Overall input credit
management vis-à-vis
GST rules and
restrictions, blocked
credit rules, etc.
Overall input credit
management vis-à-vis
GST rules and
restrictions, blocked
credit rules, etc.
Overall input credit
management vis-à-vis
GST rules and
restrictions, blocked
credit rules, etc.
Need for faceless assessment Yes Yes Can’t say Yes Yes Can’t say
Challenges in litigation Overall efficiency of the
advance ruling mechanism
Overall efficiency of the
advance ruling mechanism
Disputes on account of
advance rulings
Situation of suo moto
blocking of credit by GST
authorities
Delay in setting up the
GST tribunal
Delay in setting up the
GST tribunal
Future expectations EoDB changes that are
revenue neutral
Removal of GST credit
restrictions
Removal of GST credit
restrictions
EoDB changes that are
revenue neutral
Bring legislative changes
in ITC provisions by way
of unlocking working
capital
EoDB changes that are
revenue neutral
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 9
Executive summary
Key themes Very large Large MSME
Impact Positive Positive Positive
Areas where government has done well Automation of tax compliances Automation of tax compliances Automation of tax compliances
Future priorities of government Unlocking working capital measures Unlocking working capital measures Unlocking working capital measures
Satisfaction with digitisation efforts Yes, with room for improvement
ERP hurdles Tax technology process improvements Frequent changes in GST functionalities Tax technology process improvements
Key issues and concerns Overall input credit management vis-à-vis
GST rules and restrictions, blocked credit
rules, etc.
Overall input credit management vis-à-vis
GST rules and restrictions, blocked credit
rules, etc.
Keeping track of changing tax landscape
and developments
Need for faceless assessment Yes Yes Yes
Challenges in litigation
Delay in setting up the GST tribunal
Overall efficiency of the advance ruling
mechanism
Overall efficiency of the advance ruling
mechanism
Future expectations EoDB changes that are revenue neutral Removal of GST credit restrictions EoDB changes that are revenue neutral
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 10
Survey findings
• Impact of GST
• Government initiatives
• Use of technology
• Key issues/concerns
• Industry expectations and future proposals
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 11
Companies stated that their GST experience has been positive since the transition.
How has the GST journey been for your company, starting from transition until now?
Overall GST journey Positive impact of GST
59%
31%
10%
Positive
Neutral
Negative
N = 234
38%
Reduction in cost of
goods and services
45%
Supply chain
optimisation
56%
Competitive pricing
of goods and services
Insights
GST journey by industry
• In May 2022, GST collections crossed the INR 1.4 lakh crore mark for the fourth
time since the inception of the law. This achievement indicates that the economy
is showing signs of bouncing back after the pandemic and the overall positive
outlook for businesses.
• Responses indicate that the removal of cascading effect of taxes has positively
affected pricing and cost of goods and services to end consumers. The country
has also not witnessed an unprecedented increase in price of goods and services
as was feared at the time of implementing the new taxation regime.
• Uniform taxation across the country and removal of state barriers have also
helped companies optimise their supply chain.
52%
61%
50%
64%
50%
69%
31%
29%
44%
29%
41%
22%
17%
10%
6%
7%
9%
9%
Consumer
Energy, resources, and industrials
Financial services
Government and public services
Life sciences and health care
Technology, media, and telecommunications
Positive Neutral Negative
N = 234
N = 234
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 12
Survey findings
• Impact of GST
• Government initiatives
• Key issues/concerns
• Use of technology
• Industry expectations and future proposals
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 13
According to experts across sectors, unlocking working capital measures will fuel their sectors’ growth.
What measures/steps can act as impetus for your sector’s growth?
Measures that can act as impetus for a sector’s growth Insights
• As we complete half a decade since the implementation of GST,
measures to unlock working capital blockage seems to be on top of
the list of asks of leaders. This was highlighted across multiple
sectors, such as consumer (~80 percent), energy resources and
industrials (~73 percent), technology, media, and communications
(~73 percent), and life sciences and healthcare (~69 percent).
• GST continues to carry vestiges of the erstwhile regime in terms of
credit restrictions. The GST laws currently have specific restrictions
on construction of immovable property, despite such expenses being
incurred for a taxable output service. A majority of the leaders feel
that removing restrictions of input tax credit will contribute to their
sectors’ growth.
• With petroleum outside the ambit of GST, a large part of the
economy is still outside the tax net. Rationalisation of tax rates and
expansion of the GST net also feature in the top five asks of leaders.
• The continued push for the exports sector that includes measures to
address issues of inverted duty structure and allowing refund of
input services in such cases, is also required.
N = 234
Others
Promoting exports by
further liberalising export
rules under the GST law
Addressing inverted duty
structure in a holistic manner
Rationalising GST rates for
the entire supply chain
Removing restrictions of
input tax credit
Unlocking working capital
blockage
Expanding GST net to include
non-GST goods and services
71%
61%
58%
40%
37%
28%
4%
• Clear GST rules
• Treating taxpayers
as partners in
progress
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 14
What measures/steps can act as impetus for your sector’s growth?
Measures Consumer Technology,
media and
telecommun
ication
Energy,
resources &
industrials
Financial
services
Lifesciences
& healthcare
Government
& public
services
MSME Large Very large
Unlocking working capital measures
Addressing inverted duty structure in a
holistic manner
Rationalising GST rates for the entire
supply chain
Promoting exports by further liberalising
export rules under the GST law
Removing restrictions of input tax credits
Expanding GST net to include non-GST
goods and services
>60% 40-60% <40%
By industry By company size
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 15
The government has done well in automating tax compliances and should continue to focus on building a simplified tax
regime to promote EoDB.
What are the top three areas that the government has done well in and what should they continue to
focus on?
80%
76%
59%
56%
25%
Automation of tax compliances,
including filling returns
Introduction of e-invoicing/e-way
facility
Timely issuance of GST circulars on
contentious tax issues and clarifications
Enhanced engagement with trade bodies and
association on industry-related issues
Expeditious sanctions of refunds to exporters
Areas where the government has done well Areas where the government should continue to focus on
Creating a simplified tax regime to promote the EoDB
Upgrading technology to facilitate auto population of
monthly and annual returns
Resolving legislative ambiguities to provide relief to
taxpayers
Introducing measures to ensure consistency in the approach
followed by tax officers across jurisdictions
Introducing measures to curb tax evasion
46%
59%
58%
74%
61%
N = 234
Insights
• The government's ongoing initiatives have revolutionised the GST landscape. The industry has backed the government through its substantial policy reforms and
technological improvements.
• The automation of tax compliances has been a big win. It has brought about major synergies and efficiencies compared with the erstwhile regime, following the introduction
of a ‘one-stop-shop’ portal (GSTN) to ensure compliances under GST.
• About 59 percent leaders have acknowledged the government’s efforts in proactively issuing instructions and clarification, and streamlining processes, etc., where necessary.
This has helped avoid unnecessary pile up of litigation and unending disputes.
N = 234 N = 234
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 16
Survey findings
• Impact of GST
• Government initiatives
• Use of technology
• Key issues/concerns
• Industry expectations and future proposals
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 17
Industry leaders are partially satisfied with the government’s recent digitisation drive and the highest level of
satisfaction in the technology sector and very large corporates.
Do you think that the government’s recent technology and digitisation drive has been helpful?
Has digitisation been helpful? Insights
• In addition to unifying indirect tax methods, GST was introduced to build an end-to-end, technology-based tax
ecosystem to lower compliance burden on businesses and improve the EoDB while also curbing tax evasion.
• The government's continued adoption of progressive concepts, such as e-invoicing and establishing GSTN,
which is transcoded with advanced analytical tools to leverage taxpayer data, has resulted in positive outcomes
for businesses and tax authorities. This move has also increased transparency and controlled tax evasion.
• However, a long pending project is the fully automated version of return filing as envisaged in GSTR 1, GSTR 2,
and GSTR 3 formats. This will reduce the level of manual intervention and the extent of resources companies
need to monitor and meet compliance requirements under GST.
• Digital satisfaction levels are perhaps lower for MSMEs in comparison with large and very large corporates due
to the restricted availability of resources.
N = 234
38% 57% 5%
Yes
Partially
yes
No
Digital satisfaction by company size
40%
41%
28%
56%
52%
68%
4%
7%
4%
Very large
Large
MSME
Yes Partially yes No
N = 234
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 18
What is the level of satisfaction with IT systems and automation of your GST compliances?
Industries are partially satisfied with their IT systems and operate on moderate automation for their GST processes.
Satisfaction with IT systems Level of automation for GST processes
N = 234
44%
15%
41%
Yes No Partially
N = 234
28%
52%
18%
2%
High level of automation
Moderate automation; manual
intervention required
Requires significant manual
intervention
Completely manual
Satisfaction with IT systems by industry Insights
• The pandemic has necessitated various businesses to move online. This has boosted the
demand for automation of their GST processes .The government has also proactively
made multiple changes (e-invoice, GSTR 2B, etc.) for effective tax compliance.
• Although ~44 percent industry professionals are satisfied with their IT systems, ~41
percent are still partially satisfied due to manual intervention. Further, only a little over
half of the leaders from the technology sector are highly satisfied with their IT systems.
This shows there is still room for improvement.
• About 52 percent industry professionals stated that they operate on moderate
automation, requiring manual intervention.
• In contrast, only ~28 percent industry professional said that they employ high level of
automation with no manual intervention.
37%
46%
38%
46%
44%
51%
37%
39%
38%
36%
50%
44%
26%
15%
24%
18%
6%
5%
Consumer
Energy, resources, and industrials
Financial services
Government and public services
Life sciences and health care
Technology, media, and telecommunications
Yes Partially No
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 19
Which of the following do you feel hinder a dynamic change in ERP systems?
Upgrading tax technology is the most challenging aspect of revamping ERP systems
Insights
• Harnessing the potential of new-age technology in processes has been cited as the major challenge by ~60 percent industry professionals. About 66 percent professionals from
the life sciences and healthcare sector, ~65 percent from the technology sector, ~62 percent very large corporates, and ~63 percent from MSMEs shared this opinion.
• About 53 percent industry experts highlighted existence of multiple systems and lack of a unified system as a prominent challenge. About 66 percent experts from financial
services highlighted the same concerns.
• About 68 percent industry experts from the energy and resources sector and ~59 percent from the consumer sector believe that frequent changes in GST functionalities delay
the easy change in the ERP system.
The launch of GST mandated that Indian companies must upgrade their technological infrastructure. This required coordination between tax experts and technology teams in
introducing and tweaking ERP software as the GST rules keep updating. Companies especially small-scale enterprises with limited resources have faced several issues in revamping
ERP systems.
60% 53% 53% 35%
Tax technology process
improvements
Multiple systems in the organisation
for reporting and record keeping
Frequent changes in
GST functionalities
Skill sets of tax personnel
N = 234
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 20
Which of the following do you feel hinder a dynamic change in ERP systems?
Measures Consumer Technology,
media and
telecommun
ication
Energy,
resources &
industrials
Financial
services
Lifesciences
& healthcare
Government
& public
services
MSME Large Very large
Multiple systems in the organisation for
reporting
Skill sets of tax personnel
Tax technology process improvements
Frequent changes in GST functionalities
By industry By company size
>60% 40-60% <40%
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 21
Automation of tax ERP and tax data management are seen as the technology interventions of the highest relevance.
Which of the following technology interventions are relevant for your tax function?
Technological interventions Insights
• Increased adoption of ERP automation: With the recent expansion of e-invoice
compliance for suppliers with a turnover of more than INR 20 crore, the need to adopt
technologies such as Application Planning Interface (API) and Enterprise Resource
Planning (ERP) has increased.
• Focus on technology for data management: Faster adoption of technology is needed to
increase efficiencies in data management and reduce scope of manual intervention and
human errors.
• Credit optimisation and compliance automation: Technology adoption not only helps
the government plug revenue losses but also assists companies optimise credit
availment and automate compliances.
• Data analytics: Last but not the least, GST helps provide a plethora of data that can help
with data analytics and better decision-making for leaders.
N = 234
40%
47%
57%
58%
64%
Tax data analytics
Automation of tax activities
Tax compliance automation
Tax data management
Tax ERP automation
Technological interventions by company size
MSMEs
• Tax data
management (~61%)
• Tax ERP automation
(~58%)
Large corporates
• Tax ERP
automation (~71%)
• Tax compliance
automation (~57%)
• Very large
corporatesTax data
management (~63%)
• Tax ERP automation
(~60%)
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 22
Survey findings
• Impact of GST
• Government initiatives
• Use of technology
• Key issues/concerns
• Industry expectations and future proposals
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 23
The key issue for most companies is overall input credit management vis-à-vis GST rules.
Which of the following do you feel are the key issues in complying with GST law?
Insights
• While a majority of the industry professionals ranked overall input credit management vis-à-vis GST rules as the top issue in complying with GST laws, professionals in the
consumer sector and MSMEs ranked ‘keeping track of changing tax landscape and developments’ as the top issue.
Overall input credit management vis-à-vis GST rules
The highest-ranked issue with GST is the process of matching and
reconciliation of ITC claimed with auto-generated data. Notices for
mismatches of ITC are regularly shared with taxpayers.
Managing tax disputes
Managing tax disputes is another significant issue for the
industry as these disputes can potentially have serious long-
term ramifications with respect to both profitability and
reputation of the business entity.
Keeping track of changing tax landscape and
developments
GST has brought a paradigm shift in the taxation system of
India. With new developments, such as e-invoicing and
other structural changes, industries find it difficult to keep
up with the pace of changes.
Absence of appellate forums
The ambiguity and delay in resolution of disputes
and the absence of appellate forum to provide
clarity on various decisions is undesirable for the
industry.
01
N = 234
02 03 04
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 24
Increased tax regulations and reporting demands from tax authorities is ranked as the top issue within
the GST law and its compliance.
Which of the following are key issues and concerns companies have experienced so far?
Insights
• The tax structure of GST enforces self-
monitoring and compliance by the entire value
chain, with raw material to retail under a
single system.
• Changing tax regulations/interpretations,
including contrary views by authorities, is the
top issue faced while complying with the GST
law. There is also lack of uniformity in the
manner in which information/ data are sought
across states, resulting in duplication of efforts
and delay in the closure of proceedings.
• Industry experts from the consumer,
technology, life sciences and healthcare
sectors also ranked dual investigations by
multiple tax authorities as the highest cause of
concern.
• While the positives of GST implementation are
many, some ground still needs to be covered
as far as implementation efforts go, especially
to ease burden of taxpayers during
audit/investigation proceedings.
01
02
04
03
05
Increased tax
regulations and
reporting
demands from
tax authorities Dual
investigations by
multiple tax
authorities/
investigation
agencies
Adopting tax
positions and
implementing
specific
provisions in the
GST law
Investment of
time and effort in
managing GST
compliances
Efforts around
availing credits
with vendors,
account payable
rules, and record
keeping
N = 234
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 25
Overall efficiency of advance ruling mechanism is the biggest challenge in litigation under GST.
What is the biggest challenge in litigation under GST?
Insights
• GST litigation still in nascent stage: While significant improvement in technology-
enabled compliance has taken place, different types of disputes under GST
continue to arise given that we are still in the nascent years.
• Lack of efficiency in advance ruling mechanism: The proactive clarifications
provided by the government on several issues have helped arrest a number of
disputes. However, the question on the overall efficiency of the advance ruling
mechanism cannot be ignored. Even the idea of setting up the Centralised
Authority for Advance Rulings (CAAR) for resolution of conflicting advance ruling
authorities rendered by states seems to have been shelved for now. This had led
companies to deal with differing tax positions on several matters across different
states.
• Delay in setting up the GST tribunal: Setting up the GST tribunal has also seen an
inordinate delay. This is resulting in inconveniences to the extent that even for
disputes where companies could have expected relief at the first appellate
authority, they are forced to approach high courts (that increases their cost of
litigation and the efforts involved).
• Change in mindset and relook at reforms: The government also needs to strike a
balance between implementing revenue augmentation measures and ensuring
EoDB for taxpayers. A change in mindset, coupled with a hard look at some of the
regressive provisions, including powers of suo moto suspension, will go a long way
in providing the further thrust to the Indian economy.
N = 234
Overall
efficiency of
advance
ruling
mechanism
Mars
21% 21%
13%
20%
Dispute on
account of
advance
rulings
Delay in
setting up a
GST tribunal
Situations of
suo moto
blocking of
credit by the
GST
authorities
Invoking
powers of
suspension
of
registration
without the
opportunity
of being
heard
25%
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 26
Need for faceless assessment under GST should be assessed as GST is also technology based.
Is there a need for faceless assessment under GST?
Insights
• The government could consider evaluating the introduction of faceless assessment in the GST regime to reduce
the interaction between taxpayer and tax official during audits and assessments. This will not only make
arbitration and scrutiny by tax authorities more transparent but also reduce tax evasion.
• Although this could be modeled on the lines of the faceless assessment scheme under the Income Tax law, the
dual structure under GST in which both the centre and state governments have the right to investigate taxpayers
to curb tax evasion, would need to be weighed in.
• As GST is already heavily technology driven, whether the regime needs a faceless assessment programme also
needs to be assessed.
Need for faceless assessment
47% 35% 18%
Yes Can’t say No
N = 234
Need for faceless assessment by sector
46%
58%
34%
56%
53%
32%
37%
31%
37%
28%
34%
43%
17%
11%
29%
16%
13%
25%
Consumer
Technology, media, and telecommunications
Energy, resources, and industrials
Financial services
Life sciences and health care
Government and public services
Yes Can’t say No N = 234
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 27
A majority of the companies undertake discussions with vendors to reduce ITC loss on account of
vendor non-compliances.
Have you adopted any measures to reduce ITC loss on account of vendor non-compliances?
Insights
• Reversal of input tax credit by the receiver due to non-compliance by the supplier is one of the biggest issues faced by taxpayers since the implementation of GST.
• About 51 percent industry experts have adopted measures to reduce the input tax credit loss and undertake discussions with key vendors, while about 40 percent have started
taking steps with scope of further improvement.
• Although most sectors have already commenced discussions with their key vendors, experts from the consumer sector (~48%) and MSMEs (~42%) highlighted that there is still
room for additional steps to reduce ITC loss.
• About 21 percent professionals in MSMEs mentioned that they have not adopted measures to reduce ITC loss on account of vendor non-compliance, which is much higher
than that in large (~3 percent) and very large (~8 percent) companies. Instances of non-compliance would lead to additional costs and reduction in margins/increase in prices.
Adoption of measures to reduce input tax credit loss on account of
vendor non-compliances
51%
9%
40%
Yes, we undertake discussions
with key vendors
No, we absorb the loss of input
tax credit
Partially yes, while steps are
taken, there is room for more
to be done
Adoption of measures to reduce input tax credit loss on account
of vendor non-compliances by sector
37%
63%
49%
42%
33%
43%
21%
3%
8%
MSME
Large
Very large
Yes, we undertake discussions with key vendors
Partially yes, while steps are taken, there is room for more to be done
No, we absorb the loss of input tax credit
N = 234
N = 234
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 28
Survey findings
• Impact of GST
• Government initiatives
• Use of technology
• Key issues/concerns
• Industry expectations and future proposals
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 29
EoDB changes, ITC reforms, and improved dispute resolution for litigation management are the top suggested areas for
the government to prioritise.
What should be the focus areas for the government in the future?
Insights
• Need for increased focus on EODB: A majority of experts agree that there needs
to be an increased focus on EODB measures, including increased uniformity in the
application of the law across states, resolution of dual investigation by the centre
and states, and a dispute resolution mechanism to resolve conflicting rulings by
states.
• ITC legislative reforms: Removal of credit restrictions carried forward from the
erstwhile laws, which increase cost of doing business and hamper growth across
sectors, needs to be examined. Freeing up of working capital by considering
allowing conversion of accumulated input tax credit into tradeable scrips, cross-
utilisation of CGST credit across states, and use of credit across entities in a group
structure, would go a long way in providing the economy a boost.
• Expanding the GST net: With petroleum and real estate outside the ambit of GST,
a large part of the economy is still outside the tax net. Bringing these sectors
within the purview of GST will add to the credit fungibility and reduce cost of
goods and services to consumers.
• Dispute resolution and litigation management: Setting up of the GST tribunal and
evaluating a pan-India dispute resolution mechanism for companies to address
situations of differing views between states as well as between the centre and the
state will go a long way in setting up an integrated redressal mechanism under GST
on disputes and help expedite closure of GST matters.
Focus areas
63%
59%
54%
44%
35%
26%
EoDB changes that are revenue
neutral
Removal of GST credit
restrictions
Bring legislative changes in ITC
provisions by unlocking working
capital
Set up appellate forums for GST
matters
Broad basing of GST to include non-
GST products
Expedite closure of indirect tax
matters
N = 234
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 30
What should be the focus areas for the government next year for your sector?
Measures Consumer Technology,
media and
telecommun
ication
Energy,
resources &
industrials
Financial
services
Lifesciences
& healthcare
Government
& public
services
MSME Large Very large
Bring legislative changes in ITC
provisions by way of unlocking working
capital
EoDB changes that are revenue neutral
Broad basing of GST to include non-GST
products, such as petroleum under GST
Removal of GST credit restrictions
Set up appellate forums for GST matters
Expedite closure of legacy indirect tax
matters
By industry By company size
>60% 40-60% <40%
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 31
Which of the following options could be looked at to reduce continuing difficulties faced by taxpayers?
64%
Allowing the cross-utilisation of
CGST credit between GST
registrations of the same entity to
facilitate unblocking of
accumulated ITC
62%
Permitting payment of
reverse charge liability
through input tax credit
60%
Simplification of credit
availing procedures
38%
Conversion of
accumulated credit into
tradable scrips
34%
Removal of deeming fiction
provisions for import of
services provision (where full
credit is available)
32%
Clear guidance on non-inclusion
of employee cost as part of the
common cost cross-
charge/recharge
N = 234
Modernisation of the ITC mechanism, doing away with revenue neutral payments, and clear guidance on
interpretational issues can help taxpayers overcome their hardships.
GST@5 Survey 2022
© 2022 Deloitte Touche Tohmatsu India LLP. 32
Thank You
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL
and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see
www.deloitte.com/about for a more detailed description of DTTL and its member firms.
This material is prepared by Deloitte Touche Tohmatsu India LLP (DTTILLP). This material (including any information contained in it) is intended to provide general information on a
particular subject(s) and is not an exhaustive treatment of such subject(s) or a substitute to obtaining professional services or advice. This material may contain information sourced
from publicly available information or other third party sources. DTTILLP does not independently verify any such sources and is not responsible for any loss whatsoever caused due to
reliance placed on information sourced from such sources. None of DTTILLP, Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte
Network”) is, by means of this material, rendering any kind of investment, legal or other professional advice or services. You should seek specific advice of the relevant professional(s)
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Goods and Services Tax in India - Deloitte

  • 2. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 2 Contents Introduction • Objective and methodology • Respondent profile Executive summary Survey findings • Impact of GST • Government initiatives • Key issues/concerns • Use of technology • Industry expectations and future proposals 01 02 03
  • 3. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 3 Introduction • Objective of the study • Respondent profile
  • 4. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 4 Introduction • The aim of the study is to understand the GST journey so far and help organisations prepare for the future. • The study focuses on assessing the impact of GST across sectors as we complete five years of the new tax regime. Organisations may use these insights as a guidance to plan their future course of action. • To understand how the tax journey of organisations will evolve in the future, primary research involving an online survey of 234 CXO and CXO-1 level individuals was done. • The survey involving live users was undertaken over a four-week period. Industry type Annual turnover 25% 37% 38% Less than INR 250 crore INR 250–3,000 crore Above INR 3,000 crore 20% 17% 14% 12% 14% 23% Consumer Energy, resources, and industrials Financial services Government and public services Life sciences and health care Technology, media, and telecommunications N = 234 Objective Methodology Respondent profile
  • 5. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 5 Executive summary
  • 6. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 6 Executive summary • GST, India’s biggest tax reform, was launched with the objective to streamline taxation and reduce compliance burden. Since its launch, the country has witnessed digitisation in tax compliance and improved supply chain efficiencies. • It is a tax regime founded on a technology-based monitoring system with e-returns, e-invoices, and e-way bills. It is also vital to recognise the effectiveness of the centre-state collaboration under the auspices of the GST council, which has ensured policy implementation uniformly across states. • Despite the scale of the COVID-19 crisis, the government and the industry have been agile in adjusting to the "new normal" and restarting economic activity. This survey analyses the impact, efficiency, and future aspirations of the industry as India completes its fifth year of the GST regime. Key impact and initiatives • Overall outlook: The survey revealed that ~90 percent industry leaders view the transition to GST as largely positive. Factors such as competitive pricing of goods and optimised supply chain have benefitted a majority of the companies. • Measures for further impetus: The leaders observe that aspects such as unlocking working capital blockages, removing ITC credit restrictions, and rationalising tax rates can provide impetus to the growth of their respective sectors. • Automation and measures to boost Ease of Doing Business (EoDB): About 80 percent leaders believe that the government has done well in automating tax compliances and should continue to work on simplifying the tax system to enhance the EoDB. About 59 percent also believe that the government has proactively considered industry inputs and ensures timely issuance of GST circulars/clarifications/press notes on contentious tax issues. Industry expectations • Increased focus on EODB: The survey revealed that ~63 percent of the industry experts expect the government to implement changes to boost EODB. • ITC legislative reforms: About 54 percent leaders urge the government to consider allowing conversion of accumulated input tax credit into tradeable scrips, cross- utilisation of CGST credit across states, and use of credit across entities in a group structure. This move would significantly improve working capital management and ease cash flows. • Dispute resolution and litigation management: While significant improvement in technology-enabled compliance has taken place, the disputes under GST are still at a nascent stage. Setting up of the GST tribunals across the country and evaluating a pan-India dispute resolution mechanism for companies to address situations of differing views between states as well as between the centre and a state will go a long way and help expedite closure of GST matters.
  • 7. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 7 Executive summary Use of technology • Regular updation and improvements: The government is progressively updating the reporting and compliance processes using emerging technologies and automating key areas. • Digitisation: About 38 percent industry professionals believe that the recent digitisation efforts by the government have been helpful while ~57 percent are of the view that it was partially helpful. This is perhaps in anticipation of the long-term plan to introduce fully automated return filing. • ERP automation: Perhaps due to the multiple changes in return filing formats and their contents over the past five years, GST has also ushered and hastened the process of tax ERP automation. This leads to efficiencies in data management, compliance, and analytics. Key challenges to be addressed • Onerous input tax credit matching mechanism: The process of matching and reconciling ITC claims with auto-generated input tax credit data has increased the onus on recipients and enhanced the risk of ITC disallowance in their hands due to default of their suppliers. • Increased complexities and litigation: Multiple state-level audits of taxpayers and cross-empowerment have led to increased operational complexities and litigation for taxpayers. • Challenges in functioning of the advance ruling mechanism: Divergent rulings and absence of standardisation in rulings have also posed a major hurdle in making tax decisions for industries under the GST regime.
  • 8. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 8 Executive summary Key themes Consumer Technology, media & telecommunication Energy, resources & industrials Financial services Lifesciences & healthcare Government & public services Impact Neutral to positive: ~83% Neutral to positive: ~91% Neutral to positive: ~90% Neutral to positive: ~94% Neutral to positive: ~91% Neutral to positive: ~93% Areas where government has done well Introduction of e- invoicing/e-way facility Automation of tax compliances Automation of tax compliances Automation of tax compliances Introduction of e- invoicing/e-way facility Introduction of e- invoicing/e-way facility Future priorities of government Unlocking working capital measures Unlocking working capital measures Unlocking working capital measures Removing restrictions of input tax credits Unlocking working capital measures Rationalising GST rates for the entire supply chain Satisfaction with digitisation efforts Yes, with room for improvement ERP hurdles Frequent changes in GST functionalities Tax technology process improvements Frequent changes in GST functionalities Multiple systems in the organisation for reporting and record keeping Tax technology process improvements Tax technology process improvements Key issues and concerns Keeping track of the changing tax landscape and developments Overall input credit management vis-à-vis GST rules and restrictions, blocked credit rules, etc. Overall input credit management vis-à-vis GST rules and restrictions, blocked credit rules, etc. Overall input credit management vis-à-vis GST rules and restrictions, blocked credit rules, etc. Overall input credit management vis-à-vis GST rules and restrictions, blocked credit rules, etc. Overall input credit management vis-à-vis GST rules and restrictions, blocked credit rules, etc. Need for faceless assessment Yes Yes Can’t say Yes Yes Can’t say Challenges in litigation Overall efficiency of the advance ruling mechanism Overall efficiency of the advance ruling mechanism Disputes on account of advance rulings Situation of suo moto blocking of credit by GST authorities Delay in setting up the GST tribunal Delay in setting up the GST tribunal Future expectations EoDB changes that are revenue neutral Removal of GST credit restrictions Removal of GST credit restrictions EoDB changes that are revenue neutral Bring legislative changes in ITC provisions by way of unlocking working capital EoDB changes that are revenue neutral
  • 9. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 9 Executive summary Key themes Very large Large MSME Impact Positive Positive Positive Areas where government has done well Automation of tax compliances Automation of tax compliances Automation of tax compliances Future priorities of government Unlocking working capital measures Unlocking working capital measures Unlocking working capital measures Satisfaction with digitisation efforts Yes, with room for improvement ERP hurdles Tax technology process improvements Frequent changes in GST functionalities Tax technology process improvements Key issues and concerns Overall input credit management vis-à-vis GST rules and restrictions, blocked credit rules, etc. Overall input credit management vis-à-vis GST rules and restrictions, blocked credit rules, etc. Keeping track of changing tax landscape and developments Need for faceless assessment Yes Yes Yes Challenges in litigation Delay in setting up the GST tribunal Overall efficiency of the advance ruling mechanism Overall efficiency of the advance ruling mechanism Future expectations EoDB changes that are revenue neutral Removal of GST credit restrictions EoDB changes that are revenue neutral
  • 10. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 10 Survey findings • Impact of GST • Government initiatives • Use of technology • Key issues/concerns • Industry expectations and future proposals
  • 11. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 11 Companies stated that their GST experience has been positive since the transition. How has the GST journey been for your company, starting from transition until now? Overall GST journey Positive impact of GST 59% 31% 10% Positive Neutral Negative N = 234 38% Reduction in cost of goods and services 45% Supply chain optimisation 56% Competitive pricing of goods and services Insights GST journey by industry • In May 2022, GST collections crossed the INR 1.4 lakh crore mark for the fourth time since the inception of the law. This achievement indicates that the economy is showing signs of bouncing back after the pandemic and the overall positive outlook for businesses. • Responses indicate that the removal of cascading effect of taxes has positively affected pricing and cost of goods and services to end consumers. The country has also not witnessed an unprecedented increase in price of goods and services as was feared at the time of implementing the new taxation regime. • Uniform taxation across the country and removal of state barriers have also helped companies optimise their supply chain. 52% 61% 50% 64% 50% 69% 31% 29% 44% 29% 41% 22% 17% 10% 6% 7% 9% 9% Consumer Energy, resources, and industrials Financial services Government and public services Life sciences and health care Technology, media, and telecommunications Positive Neutral Negative N = 234 N = 234
  • 12. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 12 Survey findings • Impact of GST • Government initiatives • Key issues/concerns • Use of technology • Industry expectations and future proposals
  • 13. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 13 According to experts across sectors, unlocking working capital measures will fuel their sectors’ growth. What measures/steps can act as impetus for your sector’s growth? Measures that can act as impetus for a sector’s growth Insights • As we complete half a decade since the implementation of GST, measures to unlock working capital blockage seems to be on top of the list of asks of leaders. This was highlighted across multiple sectors, such as consumer (~80 percent), energy resources and industrials (~73 percent), technology, media, and communications (~73 percent), and life sciences and healthcare (~69 percent). • GST continues to carry vestiges of the erstwhile regime in terms of credit restrictions. The GST laws currently have specific restrictions on construction of immovable property, despite such expenses being incurred for a taxable output service. A majority of the leaders feel that removing restrictions of input tax credit will contribute to their sectors’ growth. • With petroleum outside the ambit of GST, a large part of the economy is still outside the tax net. Rationalisation of tax rates and expansion of the GST net also feature in the top five asks of leaders. • The continued push for the exports sector that includes measures to address issues of inverted duty structure and allowing refund of input services in such cases, is also required. N = 234 Others Promoting exports by further liberalising export rules under the GST law Addressing inverted duty structure in a holistic manner Rationalising GST rates for the entire supply chain Removing restrictions of input tax credit Unlocking working capital blockage Expanding GST net to include non-GST goods and services 71% 61% 58% 40% 37% 28% 4% • Clear GST rules • Treating taxpayers as partners in progress
  • 14. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 14 What measures/steps can act as impetus for your sector’s growth? Measures Consumer Technology, media and telecommun ication Energy, resources & industrials Financial services Lifesciences & healthcare Government & public services MSME Large Very large Unlocking working capital measures Addressing inverted duty structure in a holistic manner Rationalising GST rates for the entire supply chain Promoting exports by further liberalising export rules under the GST law Removing restrictions of input tax credits Expanding GST net to include non-GST goods and services >60% 40-60% <40% By industry By company size
  • 15. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 15 The government has done well in automating tax compliances and should continue to focus on building a simplified tax regime to promote EoDB. What are the top three areas that the government has done well in and what should they continue to focus on? 80% 76% 59% 56% 25% Automation of tax compliances, including filling returns Introduction of e-invoicing/e-way facility Timely issuance of GST circulars on contentious tax issues and clarifications Enhanced engagement with trade bodies and association on industry-related issues Expeditious sanctions of refunds to exporters Areas where the government has done well Areas where the government should continue to focus on Creating a simplified tax regime to promote the EoDB Upgrading technology to facilitate auto population of monthly and annual returns Resolving legislative ambiguities to provide relief to taxpayers Introducing measures to ensure consistency in the approach followed by tax officers across jurisdictions Introducing measures to curb tax evasion 46% 59% 58% 74% 61% N = 234 Insights • The government's ongoing initiatives have revolutionised the GST landscape. The industry has backed the government through its substantial policy reforms and technological improvements. • The automation of tax compliances has been a big win. It has brought about major synergies and efficiencies compared with the erstwhile regime, following the introduction of a ‘one-stop-shop’ portal (GSTN) to ensure compliances under GST. • About 59 percent leaders have acknowledged the government’s efforts in proactively issuing instructions and clarification, and streamlining processes, etc., where necessary. This has helped avoid unnecessary pile up of litigation and unending disputes. N = 234 N = 234
  • 16. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 16 Survey findings • Impact of GST • Government initiatives • Use of technology • Key issues/concerns • Industry expectations and future proposals
  • 17. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 17 Industry leaders are partially satisfied with the government’s recent digitisation drive and the highest level of satisfaction in the technology sector and very large corporates. Do you think that the government’s recent technology and digitisation drive has been helpful? Has digitisation been helpful? Insights • In addition to unifying indirect tax methods, GST was introduced to build an end-to-end, technology-based tax ecosystem to lower compliance burden on businesses and improve the EoDB while also curbing tax evasion. • The government's continued adoption of progressive concepts, such as e-invoicing and establishing GSTN, which is transcoded with advanced analytical tools to leverage taxpayer data, has resulted in positive outcomes for businesses and tax authorities. This move has also increased transparency and controlled tax evasion. • However, a long pending project is the fully automated version of return filing as envisaged in GSTR 1, GSTR 2, and GSTR 3 formats. This will reduce the level of manual intervention and the extent of resources companies need to monitor and meet compliance requirements under GST. • Digital satisfaction levels are perhaps lower for MSMEs in comparison with large and very large corporates due to the restricted availability of resources. N = 234 38% 57% 5% Yes Partially yes No Digital satisfaction by company size 40% 41% 28% 56% 52% 68% 4% 7% 4% Very large Large MSME Yes Partially yes No N = 234
  • 18. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 18 What is the level of satisfaction with IT systems and automation of your GST compliances? Industries are partially satisfied with their IT systems and operate on moderate automation for their GST processes. Satisfaction with IT systems Level of automation for GST processes N = 234 44% 15% 41% Yes No Partially N = 234 28% 52% 18% 2% High level of automation Moderate automation; manual intervention required Requires significant manual intervention Completely manual Satisfaction with IT systems by industry Insights • The pandemic has necessitated various businesses to move online. This has boosted the demand for automation of their GST processes .The government has also proactively made multiple changes (e-invoice, GSTR 2B, etc.) for effective tax compliance. • Although ~44 percent industry professionals are satisfied with their IT systems, ~41 percent are still partially satisfied due to manual intervention. Further, only a little over half of the leaders from the technology sector are highly satisfied with their IT systems. This shows there is still room for improvement. • About 52 percent industry professionals stated that they operate on moderate automation, requiring manual intervention. • In contrast, only ~28 percent industry professional said that they employ high level of automation with no manual intervention. 37% 46% 38% 46% 44% 51% 37% 39% 38% 36% 50% 44% 26% 15% 24% 18% 6% 5% Consumer Energy, resources, and industrials Financial services Government and public services Life sciences and health care Technology, media, and telecommunications Yes Partially No
  • 19. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 19 Which of the following do you feel hinder a dynamic change in ERP systems? Upgrading tax technology is the most challenging aspect of revamping ERP systems Insights • Harnessing the potential of new-age technology in processes has been cited as the major challenge by ~60 percent industry professionals. About 66 percent professionals from the life sciences and healthcare sector, ~65 percent from the technology sector, ~62 percent very large corporates, and ~63 percent from MSMEs shared this opinion. • About 53 percent industry experts highlighted existence of multiple systems and lack of a unified system as a prominent challenge. About 66 percent experts from financial services highlighted the same concerns. • About 68 percent industry experts from the energy and resources sector and ~59 percent from the consumer sector believe that frequent changes in GST functionalities delay the easy change in the ERP system. The launch of GST mandated that Indian companies must upgrade their technological infrastructure. This required coordination between tax experts and technology teams in introducing and tweaking ERP software as the GST rules keep updating. Companies especially small-scale enterprises with limited resources have faced several issues in revamping ERP systems. 60% 53% 53% 35% Tax technology process improvements Multiple systems in the organisation for reporting and record keeping Frequent changes in GST functionalities Skill sets of tax personnel N = 234
  • 20. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 20 Which of the following do you feel hinder a dynamic change in ERP systems? Measures Consumer Technology, media and telecommun ication Energy, resources & industrials Financial services Lifesciences & healthcare Government & public services MSME Large Very large Multiple systems in the organisation for reporting Skill sets of tax personnel Tax technology process improvements Frequent changes in GST functionalities By industry By company size >60% 40-60% <40%
  • 21. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 21 Automation of tax ERP and tax data management are seen as the technology interventions of the highest relevance. Which of the following technology interventions are relevant for your tax function? Technological interventions Insights • Increased adoption of ERP automation: With the recent expansion of e-invoice compliance for suppliers with a turnover of more than INR 20 crore, the need to adopt technologies such as Application Planning Interface (API) and Enterprise Resource Planning (ERP) has increased. • Focus on technology for data management: Faster adoption of technology is needed to increase efficiencies in data management and reduce scope of manual intervention and human errors. • Credit optimisation and compliance automation: Technology adoption not only helps the government plug revenue losses but also assists companies optimise credit availment and automate compliances. • Data analytics: Last but not the least, GST helps provide a plethora of data that can help with data analytics and better decision-making for leaders. N = 234 40% 47% 57% 58% 64% Tax data analytics Automation of tax activities Tax compliance automation Tax data management Tax ERP automation Technological interventions by company size MSMEs • Tax data management (~61%) • Tax ERP automation (~58%) Large corporates • Tax ERP automation (~71%) • Tax compliance automation (~57%) • Very large corporatesTax data management (~63%) • Tax ERP automation (~60%)
  • 22. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 22 Survey findings • Impact of GST • Government initiatives • Use of technology • Key issues/concerns • Industry expectations and future proposals
  • 23. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 23 The key issue for most companies is overall input credit management vis-à-vis GST rules. Which of the following do you feel are the key issues in complying with GST law? Insights • While a majority of the industry professionals ranked overall input credit management vis-à-vis GST rules as the top issue in complying with GST laws, professionals in the consumer sector and MSMEs ranked ‘keeping track of changing tax landscape and developments’ as the top issue. Overall input credit management vis-à-vis GST rules The highest-ranked issue with GST is the process of matching and reconciliation of ITC claimed with auto-generated data. Notices for mismatches of ITC are regularly shared with taxpayers. Managing tax disputes Managing tax disputes is another significant issue for the industry as these disputes can potentially have serious long- term ramifications with respect to both profitability and reputation of the business entity. Keeping track of changing tax landscape and developments GST has brought a paradigm shift in the taxation system of India. With new developments, such as e-invoicing and other structural changes, industries find it difficult to keep up with the pace of changes. Absence of appellate forums The ambiguity and delay in resolution of disputes and the absence of appellate forum to provide clarity on various decisions is undesirable for the industry. 01 N = 234 02 03 04
  • 24. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 24 Increased tax regulations and reporting demands from tax authorities is ranked as the top issue within the GST law and its compliance. Which of the following are key issues and concerns companies have experienced so far? Insights • The tax structure of GST enforces self- monitoring and compliance by the entire value chain, with raw material to retail under a single system. • Changing tax regulations/interpretations, including contrary views by authorities, is the top issue faced while complying with the GST law. There is also lack of uniformity in the manner in which information/ data are sought across states, resulting in duplication of efforts and delay in the closure of proceedings. • Industry experts from the consumer, technology, life sciences and healthcare sectors also ranked dual investigations by multiple tax authorities as the highest cause of concern. • While the positives of GST implementation are many, some ground still needs to be covered as far as implementation efforts go, especially to ease burden of taxpayers during audit/investigation proceedings. 01 02 04 03 05 Increased tax regulations and reporting demands from tax authorities Dual investigations by multiple tax authorities/ investigation agencies Adopting tax positions and implementing specific provisions in the GST law Investment of time and effort in managing GST compliances Efforts around availing credits with vendors, account payable rules, and record keeping N = 234
  • 25. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 25 Overall efficiency of advance ruling mechanism is the biggest challenge in litigation under GST. What is the biggest challenge in litigation under GST? Insights • GST litigation still in nascent stage: While significant improvement in technology- enabled compliance has taken place, different types of disputes under GST continue to arise given that we are still in the nascent years. • Lack of efficiency in advance ruling mechanism: The proactive clarifications provided by the government on several issues have helped arrest a number of disputes. However, the question on the overall efficiency of the advance ruling mechanism cannot be ignored. Even the idea of setting up the Centralised Authority for Advance Rulings (CAAR) for resolution of conflicting advance ruling authorities rendered by states seems to have been shelved for now. This had led companies to deal with differing tax positions on several matters across different states. • Delay in setting up the GST tribunal: Setting up the GST tribunal has also seen an inordinate delay. This is resulting in inconveniences to the extent that even for disputes where companies could have expected relief at the first appellate authority, they are forced to approach high courts (that increases their cost of litigation and the efforts involved). • Change in mindset and relook at reforms: The government also needs to strike a balance between implementing revenue augmentation measures and ensuring EoDB for taxpayers. A change in mindset, coupled with a hard look at some of the regressive provisions, including powers of suo moto suspension, will go a long way in providing the further thrust to the Indian economy. N = 234 Overall efficiency of advance ruling mechanism Mars 21% 21% 13% 20% Dispute on account of advance rulings Delay in setting up a GST tribunal Situations of suo moto blocking of credit by the GST authorities Invoking powers of suspension of registration without the opportunity of being heard 25%
  • 26. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 26 Need for faceless assessment under GST should be assessed as GST is also technology based. Is there a need for faceless assessment under GST? Insights • The government could consider evaluating the introduction of faceless assessment in the GST regime to reduce the interaction between taxpayer and tax official during audits and assessments. This will not only make arbitration and scrutiny by tax authorities more transparent but also reduce tax evasion. • Although this could be modeled on the lines of the faceless assessment scheme under the Income Tax law, the dual structure under GST in which both the centre and state governments have the right to investigate taxpayers to curb tax evasion, would need to be weighed in. • As GST is already heavily technology driven, whether the regime needs a faceless assessment programme also needs to be assessed. Need for faceless assessment 47% 35% 18% Yes Can’t say No N = 234 Need for faceless assessment by sector 46% 58% 34% 56% 53% 32% 37% 31% 37% 28% 34% 43% 17% 11% 29% 16% 13% 25% Consumer Technology, media, and telecommunications Energy, resources, and industrials Financial services Life sciences and health care Government and public services Yes Can’t say No N = 234
  • 27. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 27 A majority of the companies undertake discussions with vendors to reduce ITC loss on account of vendor non-compliances. Have you adopted any measures to reduce ITC loss on account of vendor non-compliances? Insights • Reversal of input tax credit by the receiver due to non-compliance by the supplier is one of the biggest issues faced by taxpayers since the implementation of GST. • About 51 percent industry experts have adopted measures to reduce the input tax credit loss and undertake discussions with key vendors, while about 40 percent have started taking steps with scope of further improvement. • Although most sectors have already commenced discussions with their key vendors, experts from the consumer sector (~48%) and MSMEs (~42%) highlighted that there is still room for additional steps to reduce ITC loss. • About 21 percent professionals in MSMEs mentioned that they have not adopted measures to reduce ITC loss on account of vendor non-compliance, which is much higher than that in large (~3 percent) and very large (~8 percent) companies. Instances of non-compliance would lead to additional costs and reduction in margins/increase in prices. Adoption of measures to reduce input tax credit loss on account of vendor non-compliances 51% 9% 40% Yes, we undertake discussions with key vendors No, we absorb the loss of input tax credit Partially yes, while steps are taken, there is room for more to be done Adoption of measures to reduce input tax credit loss on account of vendor non-compliances by sector 37% 63% 49% 42% 33% 43% 21% 3% 8% MSME Large Very large Yes, we undertake discussions with key vendors Partially yes, while steps are taken, there is room for more to be done No, we absorb the loss of input tax credit N = 234 N = 234
  • 28. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 28 Survey findings • Impact of GST • Government initiatives • Use of technology • Key issues/concerns • Industry expectations and future proposals
  • 29. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 29 EoDB changes, ITC reforms, and improved dispute resolution for litigation management are the top suggested areas for the government to prioritise. What should be the focus areas for the government in the future? Insights • Need for increased focus on EODB: A majority of experts agree that there needs to be an increased focus on EODB measures, including increased uniformity in the application of the law across states, resolution of dual investigation by the centre and states, and a dispute resolution mechanism to resolve conflicting rulings by states. • ITC legislative reforms: Removal of credit restrictions carried forward from the erstwhile laws, which increase cost of doing business and hamper growth across sectors, needs to be examined. Freeing up of working capital by considering allowing conversion of accumulated input tax credit into tradeable scrips, cross- utilisation of CGST credit across states, and use of credit across entities in a group structure, would go a long way in providing the economy a boost. • Expanding the GST net: With petroleum and real estate outside the ambit of GST, a large part of the economy is still outside the tax net. Bringing these sectors within the purview of GST will add to the credit fungibility and reduce cost of goods and services to consumers. • Dispute resolution and litigation management: Setting up of the GST tribunal and evaluating a pan-India dispute resolution mechanism for companies to address situations of differing views between states as well as between the centre and the state will go a long way in setting up an integrated redressal mechanism under GST on disputes and help expedite closure of GST matters. Focus areas 63% 59% 54% 44% 35% 26% EoDB changes that are revenue neutral Removal of GST credit restrictions Bring legislative changes in ITC provisions by unlocking working capital Set up appellate forums for GST matters Broad basing of GST to include non- GST products Expedite closure of indirect tax matters N = 234
  • 30. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 30 What should be the focus areas for the government next year for your sector? Measures Consumer Technology, media and telecommun ication Energy, resources & industrials Financial services Lifesciences & healthcare Government & public services MSME Large Very large Bring legislative changes in ITC provisions by way of unlocking working capital EoDB changes that are revenue neutral Broad basing of GST to include non-GST products, such as petroleum under GST Removal of GST credit restrictions Set up appellate forums for GST matters Expedite closure of legacy indirect tax matters By industry By company size >60% 40-60% <40%
  • 31. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 31 Which of the following options could be looked at to reduce continuing difficulties faced by taxpayers? 64% Allowing the cross-utilisation of CGST credit between GST registrations of the same entity to facilitate unblocking of accumulated ITC 62% Permitting payment of reverse charge liability through input tax credit 60% Simplification of credit availing procedures 38% Conversion of accumulated credit into tradable scrips 34% Removal of deeming fiction provisions for import of services provision (where full credit is available) 32% Clear guidance on non-inclusion of employee cost as part of the common cost cross- charge/recharge N = 234 Modernisation of the ITC mechanism, doing away with revenue neutral payments, and clear guidance on interpretational issues can help taxpayers overcome their hardships.
  • 32. GST@5 Survey 2022 © 2022 Deloitte Touche Tohmatsu India LLP. 32 Thank You
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