The Union Government has said that GST automation, faceless income-tax assessment, and e-invoicing have significantly strengthened tax compliance, reduced evasion, and improved India's macroeconomic fundamentals, according to a written reply tabled in the Lok Sabha on December 15, 2025.
Responding to an unstarred question, Minister of State for Finance Shri Pankaj Chaudhary highlighted that real-time data capture through the GST Network (GSTN) and automated invoice matching have enhanced transparency across sectors while minimizing the scope for tax evasion.
Real-Time Invoice Matching Reduces Evasion
The government noted that GST automation enables automated matching of suppliers' tax liabilities with recipients' input tax credit (ITC), thereby reducing mismatches and fraudulent claims. The phased rollout of e-invoicing has eliminated manual invoice preparation, reduced human errors, and allowed seamless integration with GST return filing systems.
Pre-filled returns, real-time validations, and simplified ITC reconciliation have collectively reduced the compliance burden on taxpayers, while simultaneously strengthening enforcement mechanisms.
Revenue Buoyancy and Fiscal Stability Improve
The Centre said that GST automation, along with faceless income-tax assessments, has led to improved revenue predictability and a wider tax base. These reforms have supported medium-term fiscal discipline and enabled better adherence to budget targets.
Improved revenue mobilisation has allowed the government to increase capital expenditure allocations from 2.5% of GDP in 2021-22 to 3.1% of GDP in 2025-26, with capex now accounting for over 22% of total central government expenditure, the reply stated
AI, Data Analytics Used to Detect Fraud
The government also confirmed the use of AI-based risk verification tools for GST registrations and automated refunds to identify high-risk cases. Advanced data analytics using e-invoice and return data is helping detect circular trading, fake ITC claims, and suspicious refund applications.
These measures, the Centre said, have played a key role in strengthening tax compliance and reducing revenue leakages.
Positive Impact on Sovereign Ratings and Investor Confidence
According to the Finance Ministry, improved tax compliance and digitalised systems have contributed to a more favourable sovereign credit outlook. India has received rating upgrades from three international rating agencies in recent years, with agencies consistently highlighting fiscal transparency, policy certainty, and strong compliance frameworks as key positives.
Relief Measures for MSMEs and Startups
To ease compliance and promote formalisation, the government outlined multiple measures for MSMEs and startups, including:
- Higher GST registration threshold of Rs 40 lakh for goods suppliers
- Increased composition scheme limit of Rs 1.5 crore
- Quarterly Return Monthly Payment (QRMP) scheme for taxpayers up to Rs 5 crore turnover
- NIL return filing through SMS
- Waiver of mandatory GST registration for certain intra-state e-commerce sellers
- Waiver of interest and penalties for legacy GST disputes under Section 128A
- Reduced pre-deposit requirements for GST appeals
- Automated GST registration within three working days for low-risk applicants
Way Forward
The government reiterated its commitment to further simplifying tax processes, leveraging technology such as AI-driven risk profiling and advanced analytics to enhance compliance while reducing unnecessary burden on genuine taxpayers.
Official copy of the notification has been attached
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