GST Implementation Leads to 134% Increase in New Taxpayers Over 7 Years

Since the introduction of the Goods and Services Tax (GST) seven years ago, there has been a remarkable 134% increase in the number of new taxpayers. According to data from the state commercial tax department, the number of active taxpayers has surged from 5.08 lakh on July 1, 2017, to 11.95 lakh currently. This growth is attributed to greater formalization of the economy and new investments, as noted by industry experts and tax professionals.

Factors Driving the Increase in GST Registrations

A source from the State Goods and Services Tax (SGST) department highlighted that the improved business environment has played a significant role in the rising number of GST Identification Numbers (GSTINs) issued each year. The GST regime, known for being taxpayer-friendly, has encouraged more liberal new registrations. However, the increase in registrations in FY 2024 was only 0.5% compared to the 11.90 lakh registrations in FY 2023.

Changes in Registration Process to Combat Fraud

To address the growing issue of bogus billing scams for tax evasion, the registration process underwent a significant change with the introduction of mandatory biometric verification. This measure led to a noticeable decline in fresh GSTIN applications, with a decrease of around 25% between November 2023 and May 2024. The active taxpayer count now excludes fraudulent registrations and is calculated after deducting cancelled registrations.

Impact of New Investments

Industry sources report that fresh investments, particularly in the semiconductor sector and other industries, have contributed to the rise in new GSTIN applications. The expansion of various industries has also driven the increase in the number of active taxpayers.

Conclusion

The GST's implementation has significantly boosted the number of taxpayers, reflecting the formalization and growth of the economy. While measures to curb fraudulent registrations have temporarily slowed the rate of new applications, the overall trend remains positive, driven by new investments and industry expansion.