Eight years have passed since the inception of the Goods and Services Tax (GST) in India. From its grand launch at a midnight session of Parliament to record-breaking collections, the journey has been transformative and informative. Here’s a comprehensive look at the landmarks, triumphs, and challenges that define the GST story.
In This Article:
Launch and Structural Milestones
Midnight roll-out (July 1, 2017): GST superseded a labyrinth of central and state taxes—such as excise, service tax, VAT, and entry tax—to create a unified, destination-based dual GST framework involving CGST, SGST, and IGST. This momentous implementation occurred in a historic midnight session of Parliament.
E-way bills and system automation (2018–19): The mandatory introduction of e-way bills for interstate transport improved compliance and logistics. The QRMP scheme and composition scheme simplified filing for small taxpayers.
Pandemic-era response (2020): GST’s role expanded during COVID-19. States used special borrowing mechanisms for compensation shortfalls, while e-invoicing was ramped up to strengthen compliance.
Digital evolution and tribunal reforms (2021–25): Mandatory e-invoicing for larger entities, automated return filing, AI-driven analytics, and the establishment of GST Appellate Tribunals to expedite disputes marked key progress.
Fiscal Impact and Revenue Trends
Record-breaking revenue:
- In FY 2024–25, GST revenues soared to ₹22.08 lakh crore—a 9.4% year-on-year growth.
- Monthly collections averaged ₹1.84 lakh crore, a sharp rise from ₹95,000 crore during the pandemic.
- In April 2025 alone, collections reached a high of ₹2.10 lakh crore.
Expanded tax base: Active GST registrants have increased from roughly 60 lakh in 2017 to over 1.51 crore by April 2025.
Formalisation of economy: The simplified tax structure has drawn more MSMEs, online sellers, and small traders into the tax net, enhancing economic transparency.
Pillars of Success
One Nation, One Tax: A single tax structure replaced multiple levies, facilitating interstate trade and eliminating checkpost delays.
Digital compliance and automation: Tools like e-way bills, e-invoicing, QRMP filing, and AI analytics have streamlined tax processes and curbed evasion.
Federal cooperation: The GST Council—which includes the Union Finance Minister and state ministers—continues to function as a successful model of cooperative federalism.
Export support: IGST refunds are now processed within a week via Customs ICEGATE, with over ₹1.18 lakh crore refunds in FY 2024–25 alone.
Challenges and Bottlenecks
Complex tax slabs: Multiple rate tiers (5%, 12%, 18%, 28%, plus special and cess rates) remain confusing. A ministerial panel is considering rationalizing them.
Refund delays: Micro, small and medium enterprises still face 60–90 day delays when filing refunds via the portal.
Compliance burden: Frequent updates, tech glitches, and return reconciliation errors pose challenges—especially for small taxpayers.
Tax disputes: Despite new tribunals, a backlog of appeals continues, and controversy over petroleum, alcohol, and cess issues persists.
Fraud and enforcement: GST Intelligence has detected nearly ₹3,500 crore in fake Input Tax Credit in West Bengal alone, showcasing enforcement efforts.
Strategies for Reform
Rate rationalisation: Merging slabs (e.g., 12% and 18%) and reducing ceiling rates to simplify compliance is under active consideration.
Automation of refunds: With IGST refunds already streamlined, similar automation could target all refund workflows to help MSMEs.
Simplified returns: Single-page returns and auto-populated data from suppliers remain on the GST Council’s agenda to ease filing burdens for small taxpayers.
Dispute resolution: Full deployment of GST Appellate Tribunals, along with e-filing interfaces, is expected to accelerate case resolution.
Technology integration: Linking GST portals with customs and banking systems, as well as enhancing AI-based risk analysis, will foster transparency and integrity.
Voices from the Field
– “51% of respondents rated automation of tax compliance as the top-performing area, and 99% of businesses reported readiness or partial readiness for GST audits.” — Mahesh Jaising, Deloitte India.
– “Beyond any doubts, implementation of GST in India … helped business to adopt technology and improve efficiencies… GST law has grown from ≈ ₹7.19 lakh crore in FY 2017-18 to ₹22.08 lakh crore in FY 2024-25.” — Karthik Mani, BDO India.
The Next Leap
Eight years into its implementation, GST has emerged as a significant driver of economic integration, revenue growth, digitalisation, and taxpayer formalisation. Yet, the path ahead is clear: simplification of rates and returns, speeding up dispute resolution, automating refund processes, and adopting technology-driven enforcement.
As India gears up for the next leap—from GST 1.0 to GST 2.0—the objective remains to build an agile, taxpayer-oriented system that supports both Viksit Bharat and a more equitable, efficient economy.
By – Sonali
