Why World Bank Downgraded India’s FY26 Forecast
The World Bank’s April 2025 update trimmed India’s FY26 GDP forecast from 6.6% to 6.3%, raising alarm over a persistent revenue shortfall. The major reason? Weak tax collection—especially from GST and direct tax fronts.
How Weak Tax Collection Hurts India’s Economy
🔻 Falling Revenue = Limited Capital for Growth
- Less tax = less room for public spending on roads, railways, health
- States suffer more, as GST devolution and compensation decline
- Higher borrowing = crowding out private investment
💰 Missed Targets in GST and Income Tax
- GST collections missed revised FY25 estimates by ₹70,000 crore
- Direct Tax shortfall seen at ₹40,000 crore (CBDT data, April 2025)
Compliance Gaps Behind Revenue Dip
🔍 Notified Insights from Govt Sources:
- CBIC FAQs (Feb 2025) flagged rising cases of ITC misuse and fake invoicing
- CBDT’s 2025 Q4 Report blamed under-reporting and low audit reach in Tier 2/3 cities
Key Cases:
Delhi HC in XYZ Traders v. GST Council ruled that tech glitches in GSTR-2B aren’t a valid excuse for wrongful claims
Supreme Court in Hero Cycles Ltd. v. Union of India highlighted procedural lapses in GST investigations
Where Businesses Must Fix: 5 Compliance Red Flags
Compliance Area Common Lapses Efiletax Solution GST Return Filing Missing GSTR-1, GSTR-3B End-to-end filing support Input Tax Credit (ITC) Mismatch with 2B, ineligibles 2B Reconciliation tool TDS / TCS Short deduction or late deposit Auto-reminder + Filing Tax Audit & 44AB Filing Delay / wrong disclosures CA-verified tax audits Advance Tax Payments Skipped instalments Quarterly tracking alerts
What Consultants Are Saying
“Most MSMEs still treat GST as a year-end task. But compliance now runs month to month. Any delay reflects as tax loss at macro scale.”