Eight Years of GST: A Journey of Transformation in India’s Tax Landscape

Goods and Services Tax (GST) has transformed India's taxation system. It’s eight years of GST and the system continues to evolve. The GST regime has transformed the way India approaches indirect taxation since it began in 2017. 

It has helped create a single tax regime affecting business owners and consumers equally. In this article, we take a glance at the journey of GST, its success stories, its setbacks, sectoral effects, and the key choices taken by the GST Council during these years.

GST Implementation Journey (2017–2025)

The Goods and Services Tax (GST) came into effect in India on 1st July 2017. It replaced the intricate, multi-layered indirect tax system with a less complicated, one-tax model. This revolution was brought about with the vision of establishing one national market by merging different taxes such as the Value Added Tax (VAT), service tax, central sales tax, excise duty, and several more under one GST. The GST seeks to simplify the process of tax, diminish cascading of taxes, and enhance ease of doing business.

The rollout of GST was a major change toward overcoming the inefficiencies of the old indirect tax regime. But the ride wasn't smooth. The transition involved teething problems on the GST portal, and corporates had to modify their ERPS to adjust to a new pattern of filing taxes. The government's willingness to act promptly and make constant improvements overcame the setbacks. 

Here’s a sneak peek highlighting key milestones in GST compliance with timelines:

By the end of 2025, GST compliance will further evolve with improvements in filing, administration, and sector-specific regulations.

GST Highlights over Eight Years

There have been numerous milestones in GST's eight-year journey. Some of the major achievements include:

• A single tax regime: GST facilitated the establishment of a single, integrated tax system for the country. The GST mechanism replaced different indirect taxes and removed the cascading effect of taxes. That, in turn, has helped businesses take advantage of smooth tax credits along the supply chain.
• Boost to ease of doing business: Simplification of the compliance process and the online tax return filing system have immensely enhanced the ease of doing business for businesses in India. Compliance with GST is relatively more transparent and easy, being a major catalyst for attracting foreign investments.
• Broadening of tax base: The GST system has broadened the tax base. The regime incentivises various small companies to legalise their business. Improved monitoring of transactions and stricter checks have lessened tax evasion cases and brought more business into the tax fold.
• Reduction of tax cascading: The input tax credit facility of the GST system enables firms to claim tax credits paid at different stages of production. It minimises the cascading of taxes, leading to reduced prices for the consumer and enhanced competitiveness among business firms.
• Technology integration: The GST system has integrated strong technological innovations. The taxpayers can electronically submit GST returns, make GST refund applications and pay GST. Data analytics by the tax authorities has increased compliance and minimised tax evasion scope.
• GST on e-commerce: Bringing e-commerce platforms under the GST regime has made things more accountable. It brings tax compliance to a segment that was not regulated earlier, making online transactions taxable as well. 

Eight Years of GST: Challenges Faced

The implementation of GST has not been free from challenges. Some of the common issues faced over the past eight years include:

• Early teething problems: Most companies found it difficult to comply when the government initially implemented the GST law. Lack of technical expertise resulted in late filing, fines, and uncertainty around compliance.
• Technical glitches: In the beginning, the GST online portal for return filing faced frequent downtimes and data processing errors. These caused inconvenience and compliance issues, especially during the initial years.
• Compared GST rates: The sheer frequency of changes in the GST rate and the multitude of tax slabs have bothered the taxpayers since long. GST popularly has four rate slabs with a few more lesser known ones. 
• Regulatory anomalies: Certain provisions of the GST rules were originally unclear. It resulted in multiple interpretations among various stakeholders. These contradictions usually led to legal conflicts, giving rise to delays and complexities in the effective implementation of GST.
• Effect on Small and Medium Enterprises (SMEs): Although GST was a game-changer for bigger companies, it caused problems to SMEs in meeting compliance under the new system. Small business owners were not equipped to meet the stringent filing procedures and technological requirements of the GST regime.
• Revenue shortfalls: Despite being planned to enhance revenue collection, there were initial years when the system witnessed shortfalls. Actual collections were less than the targets estimated. It created doubts regarding the sustainability of the GST framework with respect to generating revenue. Today, we are able to meet an average monthly GST collection of Rs.1.84 lakh crore, as per the Finance Ministry’s PIB report dated 30th June 2025.

Eight Years of GST: Sector-wise Impact

GST’s impact has been profound across various sectors, driving significant changes in business models, pricing, and compliance mechanisms. Let’s explore how GST has influenced different industries:

• Manufacturing: The manufacturing industry has gained with the eradication of the cascading effect of taxation and the introduction of the input tax credits. Still, the increased rate of taxation of some inputs and the complication of compliance have created problems for some manufacturers.
• Retail and e-commerce: The retail industry has experienced advantages as well as difficulties with GST. The ease of tax structures resulted in lower operational costs. The e-commerce industry, which was never under a formal tax regime, has been covered under the tax net. The sector now experiences difficulties in maintaining compliance under the GST law, especially in interstate transactions.
• Tourism and hospitality: The tourism and hospitality sectors were directly affected by the introduction of GST, with high rates of taxation on accommodation in hotels and services. The industry witnessed a decrease in prices for some categories but had issues with compliance and variable tax rates.
• Real estate: Real estate, historically liable for a plethora of taxes, was impacted indifferently by GST. Although the framework brought transparency to the tax regime, most developers found it challenging to adapt to new rates of tax, especially for housing and building.
• Agriculture: Agriculture itself has remained mostly out of the GST ambit, except for some processed items. Indirect taxes on agricultural inputs and transport have, however, influenced the overall supply chain, driving up costs in some instances.
• Services Sector: The services sector, such as financial services, legal, and consulting, has been hit quite hard by GST because of the need to pay tax on a host of services, which were earlier exempt or taxed at a lower rate. The sector has faced compliance issues, particularly with regard to cross-border taxation.

GST Council Decisions: Highlights

The GST Council governs India’s indirect tax structure. The GST Council has played a pivotal role in shaping the evolution of GST in India. Some of the key decisions over the last eight years include:

• Revision of GST rates: The GST Council has regularly rationalised GST rates to streamline taxation. For example, rates of taxation on basic goods, luxury products, and services have been realigned to achieve balance and fairness across industries.
• Launch of composition scheme for services and QRMP scheme: To help small enterprises, a composition scheme for service providers was launched by the GST Council, through which businesses of less than a prescribed limit may pay tax at a lower simplified rate, cutting compliance costs. Introduction of QRMP scheme eased the burden of small taxpayers allowing quarterly return filing with monthly payments.
• ITC adjustments: Input tax credit reforms enabled companies to offset tax payables through credits on taxes incurred on inputs to lower the overall tax outgo.
• Implementation of e-way bill and e-invoicing: The launch of e-way bill and e-invoicing systems was a major move towards checking evasion of tax. These systems necessitates the creation of a GSTN-verified electronic invoices and way bills for genuineness of ITC and movement of goods respectively. It encouraged claiming of precise amounts of ITC and improved tracking of goods movement throughout India.
• Amnesty scheme for appeals: Taxpayers could file appeals against demand orders beyond the timelines defined under the law under the amnesty scheme.

GST Revenue Trends

GST has significantly impacted the government’s revenue. Over the years, the GST revenue collection has risen slowly, with some ups and downs. In the initial years, one could witness GST collections lower than the estimated targets. However, the situation improved by implementing better compliance measures, enhanced tools and technology, and a broadening tax base.

A rising tax base and steady compliance are key to India’s growing GST revenue. The rise of the digital economy and new initiatives to curb tax evasion are also contributors. The government continues to focus on improving tax compliance through the use of data analytics, artificial intelligence, and machine learning.

As per the government’s PIB release dated 30th June 2025, we are able to meet an average monthly GST collection of Rs.1.84 lakh crore. In FY 2024–25, GST recorded its highest-ever gross collection of Rs.22.08 lakh crore, reflecting a year-on-year growth of 9.4% and doubling in the last five years!

Way Forward for Enterprises

Looking forward, businesses need to focus on several key areas to ensure they are not only compliant but also able to leverage the benefits offered by the GST system:

• Compliance and filing: Timely and accurate GST return filing is still crucial. Companies must make investments in automated solutions to optimise their GST compliance workflows.
• Technological adaptation: Given evolving GST rules, companies must invest in technology to help automate operations, monitor spending, and facilitate compliance. Software that merges GST filing with ERP and accounting systems helps lower manual intervention.
• Tax planning and strategy: To maximise tax liabilities, companies must implement strong tax planning strategies to achieve higher input tax credits and lower tax outflows in cash.
• Training and awareness: Businesses can stay ahead of the curve and avoid costly penalties through regular employee training about the latest GST changes, amendments, and best practices.

To conclude, eight years of GST in India have significantly transformed the indirect tax landscape. While the journey has had its fair share of challenges, the benefits have been undeniable. 

The GST system has not only streamlined taxation but also fostered economic growth by reducing inefficiencies, improving transparency, and enhancing ease of doing business. As India moves forward, businesses must continue to adapt to the evolving tax regime to harness its full potential.