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What is the story about?
Nine years after the Goods and Services Tax (GST) came into effect on July 1, 2017, India's biggest indirect tax reform has fundamentally reshaped the country's tax system. It replaced a plethora of central and state levies with a unified framework, expanded the taxpayer base and helped improve tax collections.
While GST has simplified taxation in many ways, it has also exposed structural challenges that continue to affect businesses. Issues such as the inverted duty structure, tax disputes and technology-related bottlenecks remain key areas that policymakers are expected to address as the next phase of reforms takes shape.
How has GST changed India's tax system?
Before GST, businesses had to navigate a complex network of central and state taxes, including excise duty, service tax and value-added tax (VAT). Different tax regimes across states often resulted in multiple layers of taxation, higher compliance costs and delays in moving goods across the country.
GST replaced many of these taxes with a single nationwide system, creating a common market and making it easier for businesses to operate across state borders. By reducing tax-related barriers, it has also helped improve supply chain efficiency and lowered logistics costs for many industries.
A much larger taxpayer base
One of the clearest signs of GST's expansion has been the sharp rise in registered taxpayers.
When GST was introduced in 2017, there were around 6.5 million registered taxpayers. That number has since increased to nearly 16 million, reflecting the growing formalisation of India's economy.
A broader taxpayer base improves compliance by bringing more businesses and service providers into the tax system. It also widens the government's revenue base, reducing dependence on a smaller pool of taxpayers.
Revenue collections continue to rise
GST collections have generally trended higher over the past nine years, reflecting stronger compliance, a broader tax base and steady economic activity, although monthly collections continue to vary with economic conditions and seasonal factors.
The government collected ₹22.27 lakh crore in GST during FY26. The momentum has continued into FY27, with collections exceeding ₹6.3 lakh crore during the first quarter, representing around 8% year-on-year growth.
Monthly collections have also become more stable, averaging close to ₹2 lakh crore. The highest-ever monthly collection of around ₹2.36 lakh crore was recorded in April 2025, highlighting the increasing scale of the GST system.
Among the states, Maharashtra remains the largest contributor, accounting for roughly 9% of total GST collections because of its large industrial and commercial base.
What reforms have been introduced?
GST has evolved considerably since its launch as policymakers have sought to simplify the tax regime and improve compliance.
The GST regime started out with four slabs of 5%, 12%, 18% and 28%. With the GST 2.0 reforms of October 2025, the structure was simplified to 5% and 18%, while a 40% tax was implemented for luxury and sin goods, including tobacco, high-end cars and lottery.
The move was aimed at making the tax system easier to understand for businesses and consumers. Multiple tax slabs had long been criticised for making the classification of goods and services more complicated, often leading to disputes over the applicable tax rate.
Another significant reform has been the digitalisation of tax administration. Registration, return filing, tax payments and compliance monitoring are now largely conducted online, reducing paperwork and improving transparency.
The GST Council has also emerged as the primary platform for coordinating indirect tax policy between the Centre and the states, making GST one of India's most significant examples of cooperative federalism.
What problems remain?
Despite its achievements, GST continues to face several structural and operational challenges.
One of the most persistent concerns is the inverted duty structure, where taxes on raw materials are higher than those on finished products. This increases working capital requirements for manufacturers, delays refund claims and affects cash flows in several sectors.
Businesses and tax professionals have also continued to report technology-related issues. Although the GST Appellate Tribunal has become operational, its online filing system has experienced technical glitches because of the high volume of applications. The government recently extended the filing deadline from June 30 to July 31 after users encountered difficulties with the portal.
Why is the GST Appellate Tribunal important?
The GST Appellate Tribunal is expected to play a central role in resolving tax disputes that have accumulated since GST was introduced.
The tribunal begins its work with a backlog of more than 4.5 lakh pending cases. Faster disposal of these disputes could reduce legal uncertainty, improve cash flows for businesses and strengthen taxpayer confidence by providing quicker resolution of GST-related litigation.
What happens next?
Attention is now turning to the next GST Council meeting, scheduled to be held in Kolkata later in July after a gap of around nine months since the previous meeting in September 2025.
The GST Council is responsible for deciding changes to tax rates, rules and administrative procedures, making its meetings closely watched by businesses and tax professionals.
Industry participants are expected to look for further progress on issues such as the inverted duty structure, additional rate rationalisation and measures to improve the functioning of the GST Appellate Tribunal.
The bottom line
Nine years after its launch, GST has largely achieved its core objective of creating a unified indirect tax system across India. It has expanded the taxpayer base, improved tax compliance, strengthened government revenues and helped create a common national market.
However, the reform is still evolving. Simplifying the tax structure further, resolving long-pending disputes, addressing the inverted duty structure and strengthening the technology backbone of the GST ecosystem will be critical to making the tax regime more predictable, efficient and business-friendly in the years ahead.
While GST has simplified taxation in many ways, it has also exposed structural challenges that continue to affect businesses. Issues such as the inverted duty structure, tax disputes and technology-related bottlenecks remain key areas that policymakers are expected to address as the next phase of reforms takes shape.
How has GST changed India's tax system?
Before GST, businesses had to navigate a complex network of central and state taxes, including excise duty, service tax and value-added tax (VAT). Different tax regimes across states often resulted in multiple layers of taxation, higher compliance costs and delays in moving goods across the country.
GST replaced many of these taxes with a single nationwide system, creating a common market and making it easier for businesses to operate across state borders. By reducing tax-related barriers, it has also helped improve supply chain efficiency and lowered logistics costs for many industries.
A much larger taxpayer base
One of the clearest signs of GST's expansion has been the sharp rise in registered taxpayers.
When GST was introduced in 2017, there were around 6.5 million registered taxpayers. That number has since increased to nearly 16 million, reflecting the growing formalisation of India's economy.
A broader taxpayer base improves compliance by bringing more businesses and service providers into the tax system. It also widens the government's revenue base, reducing dependence on a smaller pool of taxpayers.
Revenue collections continue to rise
GST collections have generally trended higher over the past nine years, reflecting stronger compliance, a broader tax base and steady economic activity, although monthly collections continue to vary with economic conditions and seasonal factors.
The government collected ₹22.27 lakh crore in GST during FY26. The momentum has continued into FY27, with collections exceeding ₹6.3 lakh crore during the first quarter, representing around 8% year-on-year growth.
Monthly collections have also become more stable, averaging close to ₹2 lakh crore. The highest-ever monthly collection of around ₹2.36 lakh crore was recorded in April 2025, highlighting the increasing scale of the GST system.
Among the states, Maharashtra remains the largest contributor, accounting for roughly 9% of total GST collections because of its large industrial and commercial base.
What reforms have been introduced?
GST has evolved considerably since its launch as policymakers have sought to simplify the tax regime and improve compliance.
The GST regime started out with four slabs of 5%, 12%, 18% and 28%. With the GST 2.0 reforms of October 2025, the structure was simplified to 5% and 18%, while a 40% tax was implemented for luxury and sin goods, including tobacco, high-end cars and lottery.
The move was aimed at making the tax system easier to understand for businesses and consumers. Multiple tax slabs had long been criticised for making the classification of goods and services more complicated, often leading to disputes over the applicable tax rate.
Another significant reform has been the digitalisation of tax administration. Registration, return filing, tax payments and compliance monitoring are now largely conducted online, reducing paperwork and improving transparency.
The GST Council has also emerged as the primary platform for coordinating indirect tax policy between the Centre and the states, making GST one of India's most significant examples of cooperative federalism.
What problems remain?
Despite its achievements, GST continues to face several structural and operational challenges.
One of the most persistent concerns is the inverted duty structure, where taxes on raw materials are higher than those on finished products. This increases working capital requirements for manufacturers, delays refund claims and affects cash flows in several sectors.
Businesses and tax professionals have also continued to report technology-related issues. Although the GST Appellate Tribunal has become operational, its online filing system has experienced technical glitches because of the high volume of applications. The government recently extended the filing deadline from June 30 to July 31 after users encountered difficulties with the portal.
Why is the GST Appellate Tribunal important?
The GST Appellate Tribunal is expected to play a central role in resolving tax disputes that have accumulated since GST was introduced.
The tribunal begins its work with a backlog of more than 4.5 lakh pending cases. Faster disposal of these disputes could reduce legal uncertainty, improve cash flows for businesses and strengthen taxpayer confidence by providing quicker resolution of GST-related litigation.
What happens next?
Attention is now turning to the next GST Council meeting, scheduled to be held in Kolkata later in July after a gap of around nine months since the previous meeting in September 2025.
The GST Council is responsible for deciding changes to tax rates, rules and administrative procedures, making its meetings closely watched by businesses and tax professionals.
Industry participants are expected to look for further progress on issues such as the inverted duty structure, additional rate rationalisation and measures to improve the functioning of the GST Appellate Tribunal.
The bottom line
Nine years after its launch, GST has largely achieved its core objective of creating a unified indirect tax system across India. It has expanded the taxpayer base, improved tax compliance, strengthened government revenues and helped create a common national market.
However, the reform is still evolving. Simplifying the tax structure further, resolving long-pending disputes, addressing the inverted duty structure and strengthening the technology backbone of the GST ecosystem will be critical to making the tax regime more predictable, efficient and business-friendly in the years ahead.
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