Eight Years of GST: Digital Gains Strong, But Reform Remains Key
When the Goods and Services Tax (GST) was rolled out on 1 July 2017, it marked one of the most ambitious economic reforms in independent India’s history. Replacing a maze of central and state levies, GST aimed to simplify the country’s indirect tax system and unify the nation into a seamless common market. Eight years on, GST has not only redefined how businesses transact across states but also laid the foundation for a more transparent, technology-driven tax ecosystem. As the economy continues to evolve, this milestone offers a timely opportunity to assess the journey so far—measuring its gains, acknowledging the challenges, and charting the path towards a more efficient and inclusive tax regime.
From an average monthly collection of ₹89,885 crore in FY2017–18 to ₹ 2.01 lakh crore in May 2025, GST has come a long way. The consistent rise in collections signals growing trust in the system’s effectiveness and efficiency. The integration of digital technology - enabling electronic filing, real-time data capture and end-to-end monitoring has significantly boosted compliance and revenues. Simplified filing procedures and streamlined work flows has contributed to broader acceptance, with nearly 84 per cent of India Inc. voicing support for the regime.
The rollout, however, was not without challenges. The GST Council has played a pivotal role in navigating teethingissues and steering the system towards maturity. The greatest benefit of GST is the digitisation of the tax process. Over time, the initial teething issues were addressed, and several reforms were introduced to strengthen the system. From e-way bills and e-invoicing to AI-powered, risk-based scrutiny, each initiative has not only streamlined the operations but also expanded the tax base.
The GST Council, as the nerve centre of this system, deserves high for its pivotal role in guiding and shaping the framework. As an embodiment of cooperative federalism, its decisions require a three-fourths majority - with the both the Centre and States as equal stakeholders – leading to more balanced and effective tax administration. However, much remains to be done to fully realise the vision of “One nation, One market, One tax.”
The differential rate structure and multiple exemptions have led to issues such as misclassification, resulting in dissatisfaction in some quarters. While GST had successfully unified India into a single market, the multi-slab rate structure continues to add complexity and fuel classification disputes. Looking ahead, the Council must focus on further rationalisation of tax rates to enable a gradual transition towards a uniform, single rate structure.
Sectors such as petroleum, liquor and tobacco remain outside the ambit of GST and their inclusion is essential for ensuring true uniformity in taxation. As the regime matures, this is an opportune moment for the stakeholders to explore meaningful ways to enhance efficiency, broaden the scope and future-proof the system.
The tax base under GST has grown significantly, yet there remains substantial potential for widening the base further. A comprehensive review of the GST framework is warranted to simplify the system and reduce compliance burdens - particularly for MSMEs. Also, the absence of a dedicated GST Appellate Tribunal has hindered timely dispute resolution, forcing litigants to approach overburdened courts.
Timely and targeted reforms at this stage will not only improve the ease of doing business but also curb tax evasion and support India’s aspiration to become a USD 5 trillion economy.