The Government has highlighted the significant benefits of Goods and Services Tax (GST) automation and other digital tax reforms in enhancing transparency, reducing tax evasion and strengthening India’s macroeconomic fundamentals.
In a written reply to Lok Sabha Unstarred Question No. 2414, answered on 15th December 2025, the Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, informed the House that the GST Network (GSTN) portal, along with the e-invoicing system, has played a crucial role in improving tax administration. Real-time capture of invoice data, automated matching of tax liabilities with Input Tax Credit (ITC), and pre-filled returns have reduced information mismatches, minimized scope for evasion and eased compliance for taxpayers.
The Minister stated that GST automation, faceless income-tax assessments and e-invoicing have together enhanced revenue buoyancy, widened the tax base and improved predictability of collections. These reforms have supported fiscal discipline and enabled higher budgetary allocations for infrastructure, welfare and capital expenditure. As a result, capital expenditure has increased from 2.5% of GDP in 2021-22 to 3.1% of GDP in 2025-26, reflecting the improved fiscal space created through better revenue mobilisation.
It was further informed that advanced data analytics and Artificial Intelligence (AI) tools are being used for GST registration risk verification, detection of suspicious refund claims, identification of return mismatches and curbing fraudulent practices such as circular trading and fake ITC claims. These measures have significantly strengthened tax compliance and reduced evasion.
The Government also noted that sustained tax reforms and fiscal consolidation have contributed to improved investor confidence and a more favourable sovereign credit outlook, with recent sovereign rating upgrades by three international rating agencies. Multilateral institutions and rating agencies have consistently recognised the role of digitalised tax systems and policy certainty in supporting stable public finances and long-term economic growth.
To further ease compliance for MSMEs and Startups, the Government has undertaken several simplification measures, including higher GST registration thresholds, expansion of the composition scheme, quarterly return filing under the QRMP scheme, SMS-based NIL return filing, reduced pre-deposit requirements for appeals, waiver of interest and penalties for specified past periods, and introduction of an optional simplified and automated GST registration process for low-risk applicants.
These initiatives underscore the Government’s continued commitment to leveraging technology-driven tax reforms to promote transparency, compliance, economic formalisation and sustainable growth.
The Reply can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/12/Benefits-of-GST-Automation-in-Tax-Evasion.pdf
