In a country where red tape often strangles enterprise in its infancy, it should not come as a surprise that registering for Goods and Services Tax—a supposed symbol of tax reform—became a bureaucratic nightmare. From unjustified documentation demands to arbitrary rejections, the GST registration process had, over the years, morphed into a crucible of discretion and delay. The Central Board of Indirect Taxes and Customs, perhaps for the first time with clarity and urgency, has sought to rectify this misadventure.
The government has now issued comprehensive guidelines to streamline GST registration. But the question arises: why did it take nearly eight years since GST’s launch to simplify the gateway into the very system it was meant to universalise?
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The bureaucratic malaise
Let us begin with a simple truth: a reform is only as effective as its implementation. GST, when introduced in July 2017, was sold as a panacea to the multiplicity of taxes and the complexity of compliance. And yet, registering for GST became emblematic of everything the tax reform claimed to eliminate.
Entrepreneurs like Abhinav Upadhyay and Mahima Jalan have laid bare the difficulties that accompany GST registration. Rejections on flimsy grounds, bribery demands veiled as procedural expectations, and an obsession with irrelevant paperwork had turned the registration process into a spectacle of administrative arrogance.
When officers begin asking why a residential address differs from the business location, or demand a landlord’s Aadhaar or photograph inside the premises, the objective is no longer verification but intimidation. Such queries, as the CBIC now admits, are presumptive and irrelevant. That this required explicit prohibition in a circular tells us everything about the rot in the system.
What has changed?
The recent CBIC guidelines represent a tacit admission of failure and an attempt to salvage what could still be a well-functioning system. The key reforms include:
Restricted documentation: Officers must now rely only on the indicative list in Form GST REG-01. No longer can they whimsically ask for a landlord’s PAN or Aadhaar or photos inside the business premises.
Simplified lease requirements: For rented premises, a valid rent agreement and any one document like a property tax receipt, electricity bill, or khata certificate will suffice.
Timelines with teeth: If an application is complete and not flagged, registration must be granted within seven working days. For high-risk applications—those lacking Aadhaar authentication or flagged through backend analytics—the deadline is 30 days, subject to a physical inspection.
Accountability in inspection: Officers must upload a physical verification report, GPS-enabled photographs included, at least five days before the 30-day deadline.
Prior approval for excessive queries: Any demand for documents beyond the prescribed list now requires the sanction of a Deputy or Assistant Commissioner. This adds a layer of accountability to discretion.
These changes are not trivial. By disallowing extraneous demands and setting clear timelines, the CBIC has attempted to rein in administrative overreach.
Why now
This sudden rush to simplify begs the question: what prompted the government to act? The answer lies in a confluence of discontent, data, and optics.
First, India’s ranking on the Ease of Doing Business may have improved on paper, but anecdotal evidence tells a different story. Startups—supposedly the engine of job creation—have been held hostage to inconsistent regulatory enforcement. Complaints about bribery, opaque processes, and discretionary abuse had reached a crescendo, amplified by social media and startups’ growing political clout.
Second, the CBIC is well aware of the macroeconomic signals. In an economy grappling with sluggish private investment and slow formal job creation, making it harder to start a business is self-sabotage.
Third, there is the political dimension. With Lok Sabha elections approaching and the startup community increasingly vocal, the government can ill afford to be seen as indifferent to entrepreneurs’ woes. Simplifying GST registration, therefore, is not just good economics—it is strategic politics.
What more needs to be done?
While these reforms are welcome, they do not go far enough. Simplification must be seen not just as a policy fix, but as a cultural shift.
Penalise officer non-compliance: It is not enough to issue circulars. Officers who violate the guidelines must face disciplinary action. Otherwise, the very arbitrariness we are trying to end will persist in new forms.
Establish an independent grievance redressal mechanism: A fast-track, tech-enabled portal to report officer misconduct and get time-bound responses must be instituted. The announced helpline for startups is a start but remains toothless unless empowered.
Widen Aadhaar authentication flexibility: The current Aadhaar authentication requirement—though useful in weeding out shell entities—may inadvertently exclude genuine small businesses operating in rural or migrant-heavy contexts.
Cap multi-state registration complexity: SMEs operating across multiple states still need separate registrations. This must be simplified through a unified national registration with state-wise branch declarations.
Increase awareness and training: A large number of small businesses, especially in Tier II and III cities, are still unaware of what documents are actually required. A multilingual, government-run awareness campaign—digital and on-ground—is urgently needed.
Address broader regulatory irrationalities: Entrepreneurs like Upadhyay raise valid points: why must an individual jump through hoops for every transaction in the name of curbing money laundering? India is not the only country facing illicit fund flows, but it is perhaps unique in punishing honest entrepreneurs more than wrongdoers.
The larger picture
Let us not forget that SMEs contribute nearly 50% of India’s industrial output and 42% of exports. If GST was meant to unlock efficiency and compliance, then the first step—registration—must be frictionless.
A system that forces small entrepreneurs to ‘settle’ under the table while claiming to build “Digital India” is doomed to fail in both spirit and outcome. We do not need more portals; we need fewer gatekeepers. We do not need more layers of verification; we need trust backed by technology and accountability.
Simplifying GST registration is a necessary step, but not a sufficient one. It must mark the beginning of a shift from suspicion to facilitation. That will be the real reform India needs—not in law, but in governance.
If the government is serious about economic transformation, it must remember: reform delayed is reform denied, but reform half-done is no better.