As GST turns nine, companies cite benefits like a unified market but demand simplified compliance and quicker refunds. The KPMG-FICCI survey highlights that while digital adoption is rising, issues like input tax credit reconciliation and complex registration processes continue to strain working capital for businesses.
Nine years after its introduction, the Goods and Services Tax (GST) regime continues to be a cornerstone of India’s indirect tax system. While businesses widely acknowledge the benefits of a unified national market and improved transparency, the focus has shifted toward refining the operational framework. A joint survey by KPMG in India and FICCI reveals that corporate India is now seeking a second phase of reforms to lower the administrative burden.
Operational Challenges in Compliance and Refunds
Although digitization has simplified parts of the tax process, operational hurdles persist for many organizations. According to the latest findings, nearly 59% of surveyed businesses still find the registration process cumbersome, calling for more automated approvals and a single-window system for companies operating across multiple states.
Beyond registration, the complexity of filing returns remains a significant issue. With 57% of respondents labeling current return filing as moderately complex, the demand for auto-filled returns and more consolidated timelines is growing. For investors, the most critical pain point mentioned is the delay in tax refunds, particularly for exporters and companies facing an inverted duty structure. When taxes paid on inputs exceed those on the final output, the resulting accumulation of input tax credit (ITC) can lock up vital cash reserves. Businesses are now pushing for system-driven refunds with minimal manual intervention to ease these working capital pressures.
Technology Adoption and Future Reforms
Technology is increasingly defining the relationship between businesses and tax authorities. While 46% of companies report moderate success in digitizing their GST operations, many are still struggling with the practical realities of legacy system integration and data reconciliation. Furthermore, 32% of companies are actively looking into artificial intelligence to manage their compliance needs more effectively, though the high cost of implementation remains a barrier for some.
Looking ahead, the industry’s primary request is for reduced litigation and higher certainty in tax administration. As the system moves toward its next phase of maturity, the focus will likely remain on reducing the time and cost associated with compliance. Investors should monitor future government announcements regarding the rationalization of tax slabs and any policy shifts that may simplify the ITC mechanism, as these changes could directly impact the cash flow and profit margins of sectors with complex supply chains, such as manufacturing and consumer goods.