Discover how India’s Goods and Services Tax is evolving into its tenth year, leveraging artificial intelligence and data integration to enhance efficiency, simplify compliance, and further strengthen the nation’s economic framework.
Kindly note that this illustration generated using ChatGPT has only been posted for representational purposes. Illustration: Ashish Narsale/Rediff
Key Points
- India’s GST is entering its tenth year, with a new focus on efficiency through AI, data sharing, and process simplification.
- The GST regime, launched in 2017, replaced 17 central and state taxes, significantly broadening the tax base from 66.5 lakh to 1.6 crore registered taxpayers.
- A next-gen GST with a two-tier rate structure (5% for essentials, 18% for standard goods) was launched in September 2025, aiming to reduce prices and increase savings.
- Monthly GST revenue collections have grown substantially, from Rs 89,700 crore in 2017-18 to Rs 1.85 lakh crore in FY26, reflecting improved compliance.
- Industry reports indicate widespread positive perception of GST, with calls for further AI-driven compliance and dispute reduction, while challenges remain regarding petroleum products’ inclusion.
As India enters the tenth year of rollout of the Goods and Services Tax, the focus is shifting from implementation to efficiency through use of artificial intelligence, data sharing and process simplification to reduce compliance costs, speed up refunds and tighten enforcement.
The government is increasingly using technology to simplify compliance, particularly for micro, small and medium enterprises (MSMEs), while integrating GST, income tax and customs databases to improve risk assessment, curb tax evasion, and reduce manual intervention.
GST implementation helped broaden the tax base, strengthened compliance and increased revenues, making the indirect tax regime one of India’s most significant economic reforms.
Introduced on July 1, 2017, GST replaced a complex system of 17 central and state taxes and 13 cesses with a unified indirect tax framework.
The reform, rolled out after years of negotiations between the Centre and states, was aimed at creating a common national market and reducing cascading taxes.
The registered taxpayer base has expanded from 66.5 lakh at launch to about 1.6 crore in 2026, reflecting increased formalisation of the economy.
Here is a quick recap on how GST has transformed over the last nine years.
The Historic Rollout of GST
GST was launched by the then President Pranab Mukherjee at the central hall of the old Parliament building at the stroke of midnight on July 1, 2017.
Prime Minister Narendra Modi had termed the GST as a ‘good and simple tax’ which will end the harassment of traders and small business.
Building political consensus for such a far-reaching reform was one of the biggest challenges in its implementation.
The breakthrough was achieved through extensive negotiations led by then Finance Minister Arun Jaitley, who played a key role in bringing states and political stakeholders on board.
“The monumental restructuring of one of the world’s clumsiest indirect tax systems was not an easy task,” Jaitley had remarked while reflecting on the GST reform.
Evolution of GST Rate Structure
GST was introduced as a four-tier structure of 5, 12, 18 and 28 per cent. A cess was levied over and above the 28 per cent rate for luxury, sin and demerit goods.
As the GST system matured over the years, with stability in revenues and technology backend, besides increasing the registered taxpayer base, policymakers decided it was time for a rate rationalisation.
Starting September 22, 2025, a next-gen GST with a two-tier structure was launched by placing most goods and services into two slabs — 5 per cent for essential items and 18 per cent for standard goods and services.
A separate 40 per cent slab was kept only for luxury and demerit goods. Following the rate cut, prices of most items went down, resulting in savings for people.
Finance Minister Nirmala Sitharaman said the next-gen GST will leave more cash in the hands of people.
GST rates in India are determined by the GST Council, which includes representatives from the Union and State or Union Territory governments.
Significant Growth in GST Revenues
When GST was launched in 2017-18, the average revenue collected per month was Rs 89,700 crore.
The average monthly collection stood at Rs 1.85 lakh crore in FY26, up from Rs 1.84 lakh crore in FY25.
The gross GST revenue increased 8.3 per cent year-on-year to Rs 22.27 lakh crore in the 2025-26 fiscal.
In 2024-25, it grew 9.4 per cent to Rs 22.08 lakh crore.
This rise reflects the growing formalisation of the economy and improved tax compliance.
Over the past 9 years, the growth in GST mop-up has shrugged off the concerns of states which feared revenue loss after they gave up their rights to levy state taxes like VAT and central sales tax (levied on inter-state trade), entertainment tax and octroi.
Challenges with Petroleum Products
At the time of the launch of GST, the Centre and states had agreed that petroleum products would be included in the Constitution amendment providing for the levy of GST.
But, it was left to the GST Council to decide on the date from which the five petroleum products — crude petroleum, petrol, diesel, ATF and natural gas — could be brought under GST.
While some discussion has taken place in the Council on the possibility of levying GST on Aviation Turbine Fuel (ATF), the proposal did not find favour with states.
The Centre would wait for states to come up with the proposal for the levy.
Industry Outlook and Future Reforms
A recent report by Deloitte titled GST@9 said a wide majority of India Inc – about 99 per cent – have reported a positive and neutral experience with GST, with digitisation and rate rationalisation emerging as key factors benefiting businesses.
The survey called for the next phase of reform to move beyond digitalisation to an AI-driven compliance and data-led dispute reduction.
EY India feels reform measures such as rate rationalisation, digitisation of return filing, e-invoicing, and steps towards operationalising appellate forums have strengthened the GST framework and reflect the government’s commitment to simplifying tax administration.
“However, despite these progressive changes, certain structural and procedural areas continue to warrant reform to fully realise the objective of creating a seamless, efficient, and taxpayer-friendly GST system,” Tax Partner Saurabh Agarwal said.
