GST at 9: Why easier return filing has not meant simpler compliance

Automation has transformed GST compliance, but businesses say the challenge has shifted from filing returns to managing reconciliations, vendor compliance, portal changes, and system-generated notices

Nine years after the Goods and Services Tax (GST) came into effect, filing returns has become much easier. But for many businesses, compliance has not. Instead of spending hours preparing returns, companies now spend much of their time matching invoices, following up with vendors, responding to automated notices and reconciling data across different GST systems. Technology has reduced manual work, but it has also added new compliance requirements.

 

So, has GST really made compliance simpler, or has it simply changed where the burden lies?

From manual filings to auto-populated returns

When GST was implemented on July 1, 2017, it promised a technology-driven tax system with minimal human intervention. Since then, the compliance framework has steadily become more digital.

 

 

Auto-populated returns, e-invoicing, e-way bills and invoice-level reporting have replaced much of the manual filing process. The latest addition is the Invoice Management System (IMS), which the Goods and Services Tax Network (GSTN) rolled out in late 2024 to give buyers greater control over invoices before they are considered for input tax credit (ITC), making invoice matching more accurate and reducing errors.

 

"GST has come a long way over the past nine years, with significant strides in digitisation and auto-population of returns making compliance far more structured and transparent than the pre-GST era," Pratik Jain,partner, Price Waterhouse & Co LLP, told Business Standard. "But the compliance burden itself hasn't necessarily reduced. It has shifted in character, from manual filing to continuous data management." 

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Why GSTR-1, GSTR-3B and GSTR-2B still create friction

Despite increasing automation, reconciliation remains one of the biggest pain points. Businesses must ensure that outward supplies reported in GSTR (Goods and Services Tax Return)-1, tax payments declared in GSTR-3B, and eligible credits reflected in GSTR-2B are consistent. Even small mismatches can delay ITC claims or trigger notices.

 

GSTR-1 captures a company's outward supplies, GSTR-3B is the monthly summary return through which tax is paid, while GSTR-2B is an auto-generated statement showing the input tax credit available based on suppliers' filings. Businesses must ensure that the information across all three remains consistent.

 

Advocate Saurabh Gupta of Ghaziabad-based chartered accountancy firm N Bhushan & Co told Business Standard, "The actual return-filing exercise takes less time than it did five years ago. But the due diligence around it, including chasing vendors, validating GSTR-2B before claiming ITC, and tracking IMS actions, consumes much more time."

 

According to Gupta, GSTR-2B reconciliation has now become the single most time-consuming exercise for many businesses. He said mismatches arise due to late vendor filings, incorrect GSTINs, wrong invoice classifications, delayed amendments and occasional portal-related issues.

 

"The recipient bears the cost even when the mismatch is entirely the vendor's fault," Gupta said. 

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'IMS adds control but also another compliance layer'

According to experts, IMS allows recipients to accept, reject or keep invoices pending before they flow into GSTR-2B, giving businesses greater control over input tax credit claims.

 

Gupta believes the system gives businesses an important gatekeeping role and improves ITC governance. However, it also creates another operational responsibility, particularly for businesses without dedicated finance teams.

 

"For clients without in-house account teams, this effectively creates a need for outsourced support or software, which itself becomes a new compliance cost," he said. 

Technology also brings new anxieties

"Technology has emerged as both an enabler and a source of practical challenges," Ritesh Kanodia, partner at tax advisory firm Aurtus Legal, told Business Standard. "The volume of notices has increased manifold. Even minor mismatches now prompt repeated queries, requiring taxpayers to provide explanations on an ongoing basis."

 

Kanodia added that taxpayers often receive multiple notices on similar issues from different authorities, despite the underlying information already existing within the GST ecosystem.

 

Pratik Jain believes the next phase should make automation more predictable. "A structured clarification window before notices escalate, greater allowance for genuine timing differences, and increased reliance on taxpayer self-declarations would preserve tax discipline while giving businesses greater confidence," he said.

The compliance divide between large companies and MSMEs

The increasing reliance on technology has also widened the compliance gap between large enterprises and smaller businesses. According to experts, large corporates typically have sophisticated Enterprise Resource Planning (ERP) systems, dedicated tax teams, and automated reconciliation software. MSMEs often rely on a single accountant or the business owner to manage the same compliance requirements.

 

"The rules apply equally to everyone, but the capacity to comply with ease doesn't," Jain said.

 

Mamatha Anand, partner at Deloitte India, added that GST's compliance architecture increasingly favours organisations with stronger digital capabilities, although several measures have already been introduced to ease the burden on smaller taxpayers. She believes broader technology adoption will remain central to the next phase of GST reforms.

What form rationalisation should really mean

Experts agree that the next phase of GST reforms should focus on integrating existing systems rather than merely reducing the number of forms. This includes simpler GST compliance through interoperable modules, unified reconciliation, consolidated returns, a single source of invoice-level data, and largely auto-populated filings.  "GST 2.0 should prioritise interoperability across e-invoicing, IMS, and returns, with form reduction as a secondary step, since in a data-driven system, integration enables true simplification by eliminating reconciliation, not just reducing filings," said Anand.