GST at nine: A reform still in motion
New Delhi, June 30
When India rolled out the Goods and Services Tax on July 1, 2017, it was hailed as the country's most ambitious tax reform since Independence.
Before that, India's indirect tax regime was a patchwork of 17 different taxes and 13 cesses levied by the Centre and the states.
This fragmented system created inefficiencies, hidden costs, and the notorious "tax on tax" effect that burdened businesses and consumers alike.
GST replaced this chaos with a unified framework, embodying the principle of "One Nation, One Tax".
The reform was not just about taxation; it was about building a common national market and strengthening the vision of "Ek Bharat, Shreshtha Bharat".
GST has not been static. Over the years, it has undergone continuous reforms, supported by digital infrastructure and cooperative federalism through the GST Council.
The Council's ability to adapt -- whether by revising rates, easing compliance, or correcting inverted duty structures -- has been crucial in keeping the system responsive to economic realities.
The watershed moment came in 2025 with the launch of "GST 2.0". This next-generation reform streamlined the rate structure to two primary slabs -- five per cent and 18 per cent -- while introducing a 40 per cent levy on luxury and sin goods such as tobacco, online gaming, and high-end cars.
"Rates were rationalised in GST 2.0," said Navin Kumar, the first Chairman of GST Network (GSTN).
He explained how it built indirect taxation platform for GST to help taxpayers in India to prepare, file returns, make payments of indirect tax liabilities and do other compliances.
Kumar was in charge of the technology that intended to make India's biggest tax reform in GST 1.0 work seamlessly.
GSTN provides IT infrastructure and services to the Union and state governments, taxpayers, and other stakeholders for implementation of GST.
One of GST's most significant achievements has been its embrace of technology.
GSTN has enabled real-time invoice capture, pre-filled returns, and AI-driven analytics to detect evasion. This shift to data-driven administration has improved accuracy, reduced mismatches, and made tax collections more predictable.
"Any reform is based on factual experiences. And the easier it is to comply, the higher will be tax collection," Kumar added. Thus, compliance was simplified in GST 2.0, refunds were expedited, and costs lowered, especially for MSMEs and startups.
For households, exemptions on insurance and essential medicines brought tangible relief.
The reform's impact has been felt across sectors. MSMEs, artisans, and exporters have benefited from reduced input costs and easier compliance.
Farmers and households have seen cheaper goods and services, boosting consumption and savings.
Challenges do remain. Disputes over classification, compliance costs for certain sectors, and the complexity of dual GST (CGST and SGST) continue to test businesses.
"I did notice some disputes between the Centre and states, and these were being subsequently addressed," said Sumit Dutt Majumder, former Chairman, Central Board of Excise and Customs. He was associated with the preparations for the earlier GST regime. He had also presented his views to the then Select Committee of Rajya Sabha on the GST Constitution Amendment Bill.
"This doesn't arise in intra-state transactions -- say, for example, in case of goods moving from one part of Delhi to another," added the author of several books on GST.
"But in case of inter-state transactions, say, for goods moving from Delhi to Haryana, the tax goes to the Centre, which is then handed over to the destination state," he noted.
While reforms have reduced friction, the promise of a truly seamless tax regime is still a work in progress.
Meanwhile, GST collections have become a reliable barometer of economic activity, reflecting both consumption trends and formalisation gains.
The numbers tell the story: taxpayers have grown from 66.5 lakh in 2017 to 1.65 crore as on May 2026.
Tax collections have surged from Rs 7.4 lakh crore in 2017-18 to Rs 22.27 lakh crore in 2025-26, with momentum continuing into 2026-27, reaching around Rs 4.37 lakh crore during April-May 2026.
Nine years on, GST is both a milestone achieved and a journey ongoing. Its success lies not only in rationalising India's tax system but in continuously adapting to the needs of citizens and businesses.
GST 2.0 has shown that reforms can deliver relief to households, competitiveness to industries, and buoyancy to government revenues.
India's tax system is evolving, and its success depends on sustained reforms, responsive governance, and inclusive growth.
— IANS
Reader Comments
As a homemaker, I appreciate the exemptions on insurance and essential medicines. But the 40% tax on sin goods feels like the government is moral policing. Online gaming and high-end cars are different things - why club them together? Classification disputes are real.
GST 2.0 sounds good on paper, but as a small manufacturer in Pune, compliance costs haven't dropped much. Filing two returns (CGST and SGST) is still a headache. And the dual GST model creates confusion for inter-state transactions. The article mentions this but brushes it off. We need a single uniform rate.
I'm a Canadian living in Bangalore, and I find the GST system here much better than our provincial sales taxes back home. The fact that the GST Council brings together central and state governments to decide rates is genuinely impressive. Cooperative federalism at its best! 🙌
Nine years and collections are at Rs 22 lakh crore - that's a massive jump from Rs 7.4 lakh crore! The AI-driven evasion detection is scary but necessary. My cousin in Delhi got a notice for a mismatch in invoice - they caught it in real-time. Buoyancy in revenues means better roads, schools, and healthcare for all.
Good article, but it glosses over the pain small traders faced initially. My kirana shop had to hire a CA because the return filing was so complex. GST 2.0 has helped, but let's not pretend the transition was smooth for everyone. Still, better than the 'tax on tax' nightmare before 2017. Progress is progress.