According to officials, starting in December, green taxes would be collected from cars travelling from other states to Uttarakhand. Officials say the decision is intended to keep the state clean, safeguard the environment, and limit pollution. This tax will start to be collected in December.
ANPR Cameras to Act as a Scanner
Automatic Number Plate Recognition (ANPR) cameras placed at the state’s borders will record the registration numbers of approaching cars, according to State Additional Transport Commissioner Sanat Kumar Singh. According to him, there are now 37 cameras in the border areas, up from the initial 16 that were put there. According to Singh, a vendor company has been chosen by the transport department to collect the green tax.
How Green Tax’s Eco-System will Work?
Singh stated that the vendor will get the camera data via software, which will then separate the data pertaining to government, two-wheeler, and Uttarakhand-registered vehicles and send it to the National Payments Corporation of India (NPCI) database.
He explained that after that, the wallet numbers of the car owners would be looked up, and the appropriate sum would be automatically taken out and placed into the transport department’s account. Various vehicle classifications have different tax rates: buses pay INR 140, trucks pay between INR 120 and INR 700, depending on their weight, small vehicles pay INR 80, small cargo vehicles pay INR 250, and trucks pay INR 140.
Quick Shots
•Green
tax collection to begin from December for vehicles entering Uttarakhand from
other states.
•Aimed
at reducing pollution, protecting the environment, and keeping the state
clean.
•Automatic
Number Plate Recognition (ANPR) cameras to detect and record vehicle numbers
at state borders.
•7
cameras currently operational (up from 16 earlier).
•Vendor
company appointed by the Transport Department to handle tax collection.
•Data sent to NPCI database, which
identifies vehicle owners’ wallets for automatic deduction of tax.
This article has been contributed by Cheruku Srikanth, Founder & CEO, Digital CFO.
The Goods and Services Tax (GST), introduced on July 1, 2017, replaced multiple indirect taxes such as VAT, service tax, and excise duty. As a multi-stage, destination-based tax, GST has four slabs – 5%, 12%, 18%, and 28% – depending on the nature of goods and services.
Over the years, GST collections have grown steadily, bringing fiscal stability, increased transparency, and a stronger tax base. With Budget 2025-26 introducing key amendments, GST compliance and revenue collection are expected to improve further. This article looks at the impact of rising GST collections, what drives compliance, and how simplification can encourage more businesses to participate.
How Higher GST Collections Benefit the Economy
A rise in GST collections directly impacts India’s fiscal and economic health. The benefits include:
Higher Tax Revenue:
More GST revenue allows the government to fund infrastructure, public services, and welfare programs while managing fiscal deficits.
Economic Stability:
A rise in collections signals higher consumption and production, reflecting a healthy business environment.
Lower Fiscal Deficit:
Steady revenues reduce the need for external borrowing, improving the country’s financial position.
Better Infrastructure Spending:
Increased revenues enable more investments in roads, railways, healthcare, and education, creating jobs and economic growth.
More Businesses in the Formal Economy:
GST has brought more enterprises under the tax net, improving compliance and financial planning.
Easier Business Operations:
Higher compliance reduces tax evasion and streamlines administration, making India more attractive for investment.
Inflation Concerns:
While GST revenue growth is positive, higher tax rates or compliance costs can push up prices, particularly affecting small businesses and essential goods.
Several factors have contributed to better compliance and increased tax revenues:
Technology Adoption:
E-invoicing, automated tax filing, and AI-driven reconciliation tools have helped reduce evasion.
Stronger Enforcement:
Heavy penalties, late payment interest, and cancellation of GST registration ensure businesses comply.
E-Way Bills and Invoice Matching:
Tracking goods movement and matching invoices between buyers and sellers ensures that only genuine tax credits are claimed.
Simplified Filing Process:
The QRMP scheme (Quarterly Return Monthly Payment) has eased compliance for small businesses, while ERP software integration has streamlined tax returns.
Increased Awareness:
MSME outreach programs, tax workshops, and digital education have improved compliance levels.
Economic Growth and Digital Transactions:
The rise of e-commerce and digital payments has expanded the tax base, making evasion harder.
Tax Rate Adjustments:
Lower GST on essential goods encourages voluntary compliance.
Government Incentives:
Faster GST refunds, easier credit claims, and compliance-linked loan benefits motivate businesses to follow regulations.
The Need for Simplified GST Compliance
Despite improvements, GST compliance remains complicated for many businesses. Key challenges include:
Multiple tax slabs (5%, 12%, 18%, 28%) leading to confusion.
Input Tax Credit (ITC) mismatches cause compliance delays.
Multiple return filings (GSTR-1, GSTR-3B, GSTR-9) add to the workload.
Simplifying GST processes will encourage more businesses to register and file returns correctly. Benefits include:
More voluntary compliance due to reduced complexity.
Fewer errors and tax penalties.
Easier ITC claims, improving cash flow.
Integration with ERP and automated tax filing systems to make compliance hassle-free.
Budget 2025-26: Key GST Reforms
The latest budget has introduced several changes to improve compliance and trade facilitation:
ITC for Input Service Distributors (ISD):
From April 1, 2025, ISD can distribute ITC on inter-state reverse charge transactions, helping businesses with centralised procurement.
Clarity on SEZ and FTWZ Transactions:
Goods stored in Special Economic Zones (SEZs) and Free Trade Warehousing Zones (FTWZs) will not be classified as supply, reducing tax disputes.
GST Slab Restructuring:
The government is working on simplifying tax slabs to reduce compliance costs for businesses, especially SMEs.
Track and Trace Mechanism:
A new Unique Identification Marking system will improve supply chain transparency, benefiting high-value industries.
ITC for Immovable Property:
A retrospective amendment allows businesses to claim ITC on property-related investments, including plant and machinery.
Mandatory Pre-Deposit for Penalty Appeals:
Businesses appealing GST penalties must pay a 10% pre-deposit, ensuring a more structured dispute resolution process.
Return Filing Conditions:
New regulations will set conditions for GST return filing, improving transparency and compliance.
Conclusion
GST has played a key role in improving tax compliance and formalising India’s economy. While progress has been made, issues like complex return filing and ITC mismatches still need attention. The reforms announced in Budget 2025-26 aim to simplify compliance, reduce business burdens, and create a more efficient tax system.
With increasing digitisation and AI-driven tax compliance tools, automation will play a critical role in improving collections and making GST compliance easier. As policies evolve, India is set to create a more business-friendly GST framework that balances revenue growth with economic ease.
Amid the deluge of tax notices being slapped on companies, the GST (Goods and Services Tax) Council is receptive to complaints and is said to be providing clarifications on the same. However, the onus lies on companies to be prudent in their tax and financial compliance, said tax experts that StartupTalky spoke with.
The GST Council is an apex body appointed by the government to make recommendations and modifications pertaining to GST.
“In many cases, the GST council is proactively looking into the issues. Some of the issues are getting resolved due to clarifications issued from time to time, but not all of them. The individual taxpayer or their associations are approaching the GST council and they are trying to get a resolution,” said Sunil Gabhawala, chairman of the Indirect Tax Committee at the Institue of Chartered Accountants of India and former president of the Bombay Chartered Accountants’ Society. Gabhawala was also a member of the Study Group constituted by the Maharashtra Government for implementing GST.
The tax department has been slapping tax notices on a number of companies, catching them by surprise.
“To some extent the GST Council is receptive, they are open to hearing the representation and if they feel that there is something where they could give a clarification then they are trying. It is only that the point has to fit into the decision-making process,” Gabhawala said.
GST was implemented in 2017, replacing a multilayered tax system. The first few years of the new tax regime were marked by implementation issues. However, over the past few years, the tax department has tightened the corks and screws of the GST framework.
Recently, the tax department unveiled its GST report, which gave a sneak peek into how the new tax regime had reformed the taxation process.
“The GST was structured to be technology-driven so that there is less scope for compliance issues, tax evasion, and corruption, and to enhance the user experience for both taxpayers and tax officers,” said a report released in April by the Director General of Taxpayer Services commemorating five years of the GST regime.
A no-frills approach could make business sense at times, but when it comes to financial reporting and compliance, ‘less is never more’, according to some tax consultants.
“It’s crucial for companies to maintain accurate records, comply with GST (Goods and Service Tax) laws, and stay informed about any changes in regulations to avoid large tax liabilities and the associated penalties,” said Yogesh Singhania, Chief Business Officer of Hostbooks, which provides digital accounting services.
The need for hiring a professional in matters of taxation and finances has gained further importance as businesses, especially startups, seem unsustainable.
“You cannot always bear the flag of a ‘startup’, or a small company, when it comes to compliance. Just to save money, you cannot have a consultant who is not qualified,” said Jatin Chedda from the GST Practitioners of Maharashtra.
Notice Corner
A number of companies from various sectors have received the taxman’s notice. We enlist a few types of notices that companies have received:
Evasion
A number of companies have simply not paid up their tax liabilities. In July, Finance Minister Nirmala Seetharaman informed the Parliament that 2784 cases worth INR 14,302 crore of GST tax evasion were detected in April–May, out of which INR 5,716 crore were recovered.
Mismatches
A majority of companies that have received GST notices are where the tax authority has observed discrepancies in the taxes filed. The government had rolled out an automated scrutiny of GST returns, which led to notices being triggered wherein there were data mismatches. These mismatches pertain to different types of returns being filed i.e. monthly and annual.
Input Tax Credit
Of the many mismatches that have been found, those pertaining to taking undue advantage of the input tax credit a number of companies, especially insurance companies, availed of the input tax credit using fake invoices. These fake invoices were issued by intermediaries for services such as marketing, branding, and advertising without actually providing for the underlying service. In September 2022, the DGCI said fraudulent input tax credit to the tune of INR 824 crore had been availed of by 16 insurance companies, out of which some of them had already paid INR 217 crore.
Change of Rules
Companies have to cough up money when tax authorities change laws. The tax department and a number of gaming companies have been at loggerheads since the former tweaked its law pertaining to gaming companies. The DGCI issued a statement earlier this year stating that from October 1, GST of 28% would be levied on the full value of bets and not on the gross gaming revenue. However, a number of companies are also contesting notices wherein GST has been applied to bets placed before October 1.
Interest and Penalties
Companies such as LIC have been slapped with penalties for paying GST at lower rates. Infosys Limited has been charged a penalty and interest for non-receipt of inward remittances from export proceeds.
Conclusion
The unification of tax laws and technology has added more weapons to the taxman’s arsenal. There is no escaping their hawk-like scrutiny. With a more formal structure in place, the tax department is focusing on its core objective of vigilance. This calls for heightened self-regulation and surveillance from corporations themselves. At the same time, companies must be aware of the procedures and the corporate bodies to approach if they have been erroneously penalized. Henceforth, cutting corners may not be the brightest of ideas when it comes to hiring experts in taxation and financial matters.
