Why Don’t Firms File Tax Returns on Time? Evidence from the Indian GST

We study the prevalence and reasons for non-filing and late-filing of electronically-filed Goods and Services Tax (GST) returns in the Indian context. Despite being easily observable and punitive, we document that about 30 per cent of returns are routinely filed late, and about 10 per cent of returns are never filed. Our findings suggest that non-compliance is coming from cases where tax officer intervention is required and that light-touch nudges delivered through automated calls can raise compliance. Encouraging filing increases tax revenue, as non-compliance is not limited to taxpayers with zero or low tax liability, contrary to common belief. The effectiveness of individual-level enforcement and incentives is limited by non-compliance among taxpayers’ supplier networks.