With the GST rates and processes almost stabilising after nine years of the GST rollout, the Centre and states' tax officers have been told to work towards deepening the taxpayer base, increasing cash tax collections, and using intelligence and deeper data analytics to nab evaders, sources said.
They said e-invoicing for B2C transactions would come into effect from April 1, 2027, with GST Network providing the support system to states to move towards it. GST officers will act as a facilitator for businesses and tell them the audit benefits of the tax department having granular data.
Sources further said that some of the process reforms, including the Rs 10,000 threshold for sending notices, approved by the 57th GST Council meeting, require only changes in rules and could be rolled out sooner.
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With the economic benefits of last year's GST rate rationalisation showing results, GST officers will now follow a more "facilitative approach" rather than "mandatory compliance" to show trust in taxpayers.
"We have asked GST officers to increase cash tax collections and use deeper data analytics instead of being too intrusive. Although we have a good number of taxpayers registered under GST, there is scope to widen the base. We have asked states to widen the base," a source said.
Currently, there are about 1.68 crore taxpayers registered under GST.
Centre and state tax officers divide the taxpayers on the basis of a formula. As much as 90 per cent of the taxpayers having turnover below Rs 1.5 crore are handled by state GST administration. The remaining 10 per cent are with the central tax administration.
Taxpayers with turnover above Rs 1.5 crore are divided equally between Central and state tax administration.
Sources said state tax officers should ensure that cash tax collections increase and output tax liability of businesses should not be equal to their input tax credit claims.
"We need to strengthen our tech system and adopt a non-intrusive approach. We have to improve data analytics, find gaps and increase outreach to taxpayers to make them understand the benefits of compliance," a source said, while drawing a parallel to the Income Tax Department's 'Nudge' campaign.
Sources said the B2C e-invoicing will ensure data till the last mile in the supply chain --- from suppliers to final buyer.
Currently, businesses with average annual turnover of Rs 5 crore have to mandatorily generate e-invoice for B2B sales.
The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising state counterparts, had in September 2024 recommended rolling out a pilot for B2C e-invoicing.
Sources said the B2C e-invoicing will be rolled out on a voluntary basis from April 1, 2027.
"We are encouraging states to use the GSTN system for B2C e-invoicing. As regards the businesses, we will show them the benefits of B2C e-invoicing and the impact it will have on audit compliance. Since tax officers will be getting granular data with B2B and B2C e-invoices, they will be treated better in tax administration," a source said.
The source further said that currently there are many instances wherein B2C sales are misused, and instead suppliers are just rerouted to claim ITC benefits.
"We need intelligence and analytics to act as deterrence. We want taxpayers to feel the benefits of compliance by acting as a facilitator," the source added.
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