The Future of GST: Trends, Challenges, and Opportunities

By Tanya Gupta

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Updated on: Oct 8th, 2025

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5 min read

Future of GST remains dynamic. GST law and the system is constantly evolving, even in its 8th year. Tax compliance has become much easier under the GST regime as businesses can perform every compliance task through a single window of the online GST portal

Zero manual intervention has reduced the chances of corruption and harassment by unscrupulous tax officials. But it has its own set of complexities. GST compliance requires businesses to achieve a high level of technology adoption and a tech learning curve. For small traders and manufacturers, it can be burdensome.

In this article, we will explore the journey of GST so far, highlight the role of technology, and discuss the future aspect of GST.

Evolution of GST

The government introduced Goods and Services Tax (GST) in 2017 to make it the only indirect tax for the whole nation, i.e. "One Nation, One Tax". This simplified and unified tax structure was designed to waive off the cascading effect of paying multiple taxes. GST has continuously evolved in response to the needs of various stakeholders including business, government, and the general public.

From increasing the threshold for obtaining registration to constantly changing the tax rates as and when needed, the government has introduced significant transformations to the framework. These reforms underline the future scope of GST in India and reflect the government's commitment to improving the tax ecosystem.

Here is the list of key reforms which were brought to the GST law:

S.No.

Type of reform

Date of implementation

Description

1

Introduction of e-way bill

1st February 2018

A registered person must get an e-way bill for the movement of goods exceeding Rs.50,000.

2

Automated ITC visibility with GSTR-2A introduction

1st February 2019

The GSTR-2A form was introduced to give buyers a consolidated view of the invoices uploaded by their suppliers in GSTR-1. ITC claims began being verified against GSTR-2A data, which was still not mandatory. Taxpayers had to reconcile discrepancies between GSTR-3B and GSTR-2A manually.

3

Automated Return Scrutiny System

It was introduced in May 2023, applicable from FY 2019-20 onwards

An automated return scrutiny system was launched to implement a non-intrusive verification process that enables central tax officers to scrutinise GST returns where anomalies are identified based on data analytics and risk parameters.

4

Launch of GSTR-2B (Static statement auto-generated from supplier filings)

August 2020

GSTR-2B was introduced as a static, monthly statement for ITC claims. Unlike GSTR-2A, it remained unchanged for a specific tax period. It provided clarity on ITC eligibility, minimising errors but increasing reconciliation efforts to be more regular instead of occasional.

5

E-invoicing Mandate

1st October 2020

Businesses above a threshold limit must authenticate the invoices electronically through the Invoice Registration Portal (IRP). E-invoicing ensured real-time sharing of invoice data with the GST portal, auto-populating GSTR-1 and GSTR-2B for seamless ITC validation.

6

QRMP Scheme

1st January 2021

An optional scheme to help small businesses opt for quarterly GSTR-3B filing.

7

Restriction on Provisional ITC

1st January 2022

Rules restricted taxpayers from claiming more than 105% of ITC reflected in GSTR-2A or GSTR-2B, which was eventually brought down to 100% of ITC in GSTR-2B alone. This effectively eliminated the practice of claiming provisional ITC. It encouraged suppliers to upload invoices promptly, fostering compliance.

8

AI in Tax Scrutiny

2022 and onwards

The government started using Artificial Intelligence (AI) to scrutinise tax filings, detect discrepancies, and ensure compliance. AI and ML identified suspicious patterns, such as fake invoices, under-invoicing, or mismatched Input Tax Credit (ITC) claims.

9

Invoice Management System 

14th October 2024

IMS is a communication functionality on the GST portal that connects suppliers and recipients through invoice reporting and a single dashboard interface. It aims to significantly improve the process of ITC claims.

10

Hard-locking of auto-filled sales value in GSTR-3B

17th October 2024

Hard locking of GSTR-3B implies that the auto-populated sales liability field becomes non-editable. With this amendment, any necessary corrections to outward supply details must be made through GSTR-1A before filing GSTR-3B.

11

GST 2.0 reforms/ GST rate restructuring

Announced on 3rd September 2025

Implemented from 22nd September 2025 (Notified by the CBIC on 17th September 2025)

Recommendations at the 56th GST Council meeting

-12% and 28% tax brackets are removed. 

-Over 200 items are reclassified into either 5% merit or 18% standard tax slabs. A new 40% tax slab without cess is introduced for sin goods.

-It necessitates finance teams to recalibrate pricing strategies, adjust sales forecasts, and optimise compliance processes.

Role of Technology in the Future of GST

Though GST was meant to be a simple tax. However, with frequent changes introduced in the law, it has become difficult for businesses to comprehend its provisions. After long deliberation, in 2025, India has moved to a two-tier GST rate structure- 5% and 18%, along with a 40% slab for sin goods. Initially, it will provide relief to the consumers, but enterprises may need to re-align their billing and ERP systems while solving for any newer instances of inverted tax structure.

Moreover, the government has adopted technology like Artificial Intelligence (AI), Machine Learning (ML), and data analytics. Since 2022, it has been used to scrutinise tax filings, detect tax evasion, and improve revenue collections. A study by Team Clear reveals that AI is fueling automated tracking and tax alerts, so much so that 80% of the notices received by businesses today are system-triggered. 

With the increasing volume of reporting requirements, data reconciliation, and audit processes, it becomes challenging for businesses to constantly adapt. Traditional processes of working in silos with manual data entry only add to complexity, confusion, and data inconsistencies across regulations. All this leads to an unnecessary compliance burden, which calls for adoption of automation and technology like Robotic Process Automation (RPA). This will help businesses automate repetitive tasks like data entry and report generation, ensuring consistency and speeding up processes.

Future of GST in the Indian Economy

The future impact of GST on the Indian economy is significant. The GST reform is still very much a work in progress, with the government actively planning to expand the taxpayer base by bringing in more businesses and rationalising existing tax slabs and rates. The government's future plan for GST includes stringent reforms to prevent tax evasion, such as:

  1. Implementing hard locking of auto-filled ITC values in GSTR-3B returns: On 17 October 2024, the government issued an advisory on the GST portal regarding restricting the editing of auto-populated liability in GSTR-3B from the January 2025 tax period. We are yet to see the implementatio of auto-locking pre-filled ITC values in the GSTR-3B returns. GST 2.0 reforms also indicated the authorities moving towards the pre-filled GST return system. It will soon be implemented, making it indispensable for businesses to adopt a proactive approach. 
  2. Mandatory e-way bill blocking and e-invoice integration: In 2024, the provision to block the generation of e-way bills, without an e-invoice for the corresponding transaction, was introduced. While this provision was temporarily withdrawn, it signals a clear direction towards stricter compliance in the future.
  3. Emerging technologies in tax compliance: The authorities are already using technologies like AI and ML to ensure tax compliance. This marks the beginning of a tech-enabled GST future. Businesses, especially CFOs, must leverage technology and prepare for the future benefits of GST in India.

Frequently Asked Questions

How is GST expected to evolve in the coming years?

GST is expected to be backed by technology. The government will introduce provisions to prevent tax evasion and achieve more transparency in GST compliance. The future of GST in India will be shaped by automation and real-time compliance.

Is GST successful in India?

Yes, GST has been largely successful in unifying India's indirect tax structure, increasing tax compliance, and formalising the economy. However, challenges around rate complexity, frequent policy changes, and compliance costs for MSMEs still persist. The long-term impact of GST is positive but requires continuous reform.

Will GST rates be reduced or rationalised in the future?

Since the introduction of GST in 2017, the GST Council regularly tries to review rates to simplify the tax structure in its quarterly meetings with council members. Even the Group of Ministers (GoM) for rate rationalisation was set up in September 2021. They have regularly submitted the reports on which the council recommends the changes in the tax rates. Accordingly, effective 22nd September 2025, GST rate structure was made a two-tier with 5% merit and 18% standard rates on most items, including a 40% tax slab for sin goods.  

Will GST compliance become easier with automation and AI?

Yes. Automation and AI are already transforming GST compliance. From auto-filling GST returns to flagging mismatches and triggering notices. As AI adoption deepens, businesses can expect lower manual effort, reduced errors, and real-time alerts, making GST compliance far more efficient.

How will the GST framework impact India’s goal of becoming a $5 trillion economy?

GST’s framework of one nation, one tax helps in eliminating the cascading effect of multiple taxes. This in turn has helped both the government, with the increase in revenue and the businesses, with lower cost of goods and services.

What future reforms are expected in the GST system for exporters?

Exporters can expect reforms such as faster refunds and simplified LUT/Bond processing. These changes aim to ease working capital strain and make Indian exports more competitive globally.

What is the long-term impact of GST on the Indian economy?

In the long run, the impact of GST on the Indian economy is as follows:

  1. Simplified tax structure
  2. Boosted tax compliance
  3. Ease of doing business
  4. Formalisation of the economy
About the Author
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Tanya Gupta

Content Writer
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A Chartered Accountant by profession and a content writer by passion, I've dedicated my career to unraveling the complexities of GST. With a firm belief that learning is a lifelong journey, I've honed my skills in simplifying intricate legal jargon into easily understandable content. The satisfaction of transforming complex tax laws into relatable narratives is what drives me. Read more

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