Transforming Taxation: A Decade of Achievements and Reforms - Highlights from Budget 2024-25

In recent years, taxation reforms have played a pivotal role in reshaping India's economic landscape, fostering growth, and improving fiscal management. The Budget 2024-25 continues this trajectory, building upon the achievements of the past decade while introducing new measures to enhance efficiency and transparency in the tax system. In this blog, we explore the remarkable journey of taxation reforms in India and delve into the key highlights from the Budget 2024-25. 

Direct Tax Collections: One of the most significant achievements in taxation reforms has been the substantial increase in direct tax collections over the last decade. In the past ten years, direct tax collections have more than trebled, reflecting improved compliance and enforcement measures. This surge in collections has not only bolstered government revenues but has also contributed to fiscal sustainability. 

Expansion of Tax Base: Another noteworthy accomplishment is the significant expansion of the tax base, with the number of return filers increasing by 2.4 times. This surge in the taxpayer base is a testament to the success of initiatives aimed at promoting tax compliance and broadening the tax net. The growing number of taxpayers reflects increased economic activity and a more inclusive tax system. 

Faster Refunds and Efficiency Gains: The Budget 2024-25 highlights significant improvements in tax administration, particularly in the processing of returns and issuance of refunds. Over the years, there has been a remarkable reduction in the average processing time of returns, from 93 days in 2013-14 to just 10 days in 2023-24. This streamlined process has not only enhanced taxpayer experience but has also improved overall efficiency in tax administration. 

Impact on Consumers: Taxation reforms have also had a positive impact on consumers, leading to a reduction in logistics costs and prices of most goods and services. The implementation of Goods and Services Tax (GST) has played a crucial role in simplifying the tax structure and eliminating cascading effects, resulting in cost savings that are passed on to consumers. 

Growth in GST Collections: The Budget 2024-25 highlights the significant growth in Gross GST collections, with average monthly collections doubling to ₹1.66 lakh crore in FY24. This robust growth in GST revenues underscores the success of GST implementation and its role in bolstering government revenues while fostering a more transparent and efficient indirect tax system. 

Improvement in Import Release Time: Taxation reforms have also led to improvements in import release time, reducing bottlenecks and enhancing trade efficiency. Since 2019, there has been a notable decline in import release time across various ports and cargo complexes, further facilitating ease of doing business and trade facilitation. 

Positive Sentiment about GST: Lastly, there is a positive sentiment among industry leaders about the Goods and Services Tax (GST), with 94% of respondents viewing the transition to GST as largely positive. Additionally, 80% of respondents feel that GST has led to supply-chain optimization, streamlining operations and reducing compliance burdens. 

Conclusion: The Budget 2024-25 reflects the remarkable achievements of taxation reforms in India over the past decade, highlighting the transformative impact of these measures on revenue mobilization, tax compliance, and economic growth. As India continues its journey towards economic prosperity, taxation reforms will remain a cornerstone of policy efforts aimed at fostering sustainable and inclusive development.

Mon Feb 5, 2024