GST at Eight from Reform to Refinement

It’s been eight years since GST was introduced in India, bringing big changes to how indirect taxes work across the country. GST has helped create a common market and made doing business easier in many ways. Today, we look back at what’s worked, what’s been tough, and what lies ahead.

Revenue Reimagined: Rising GST Collections Signal Economic Vitality

India’s GST collections have shown remarkable buoyancy, even amid global economic headwinds and domestic challenges. Increasing monthly revenues consistently reflect strong consumption patterns and the growing effectiveness of compliance systems, with May 2025 collections reaching an impressive ��2.01 lakh crore.

This upward trend has been supported by calibrated refinements in input tax credit norms, widespread adoption of e-invoicing, and the strategic use of data analytics to strengthen oversight. While these measures have contributed to fiscal robustness and a lot has been done to streamline and ease compliances, small and mid-sized companies continue to emphasise the importance of maintaining a balanced and more eased compliance environment for them.

Digital Backbone: E-Invoicing and the Compliance Revolution

Among the most impactful reforms has been the adoption of E-invoicing for B2B and export transactions. By enabling real-time invoice authentication, this system has streamlined input tax credit reconciliation and curtailed tax leakages. It exemplifies the Government’s commitment to building a transparent, tech-enabled compliance ecosystem that minimises manual intervention and maximises accountability.

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Bridging the Gaps: Industry’s Wishlist for GST 2.0

While GST has come a long way, businesses still see room for improvement. Here are some key areas they hope will be addressed:

Faster Refunds and Clearer Rules

Timely refund processing, especially for exporters, plays a vital role in supporting business liquidity and encouraging global trade. The government’s ongoing efforts to streamline procedures are helping ease these pressures with industry expecting the momentum to continue and all backlogs of refunds being disposed soon. As GST continues to evolve, greater consistency in implementation across states will further strengthen its core objective of creating a unified and seamless tax environment. Industry stakeholders are optimistic that continued collaboration will lead to even more harmonised and business-friendly outcomes.

A Decade of Compensation Cess: Defining the Path Forward

The Compensation Cess, originally introduced as a temporary measure to support states during the initial GST transition, has played a valuable role in maintaining fiscal balance. Its extension until March 2026 has helped the Government address pandemic-related fiscal needs. As the economy moves forward, sectors like automobiles and tobacco, key contributors to this levy look forward to greater clarity on its future. This will help them plan investments and operations with more confidence, supporting long-term growth and stability.

What Should Be Simplified: Returns, Litigation, and Classification

Despite digital advancements, businesses continue to grapple with reconciliation challenges across��GSTR-1, GSTR-3B, and GSTR-2B, especially when vendor defaults disrupt the credit chain. Additionally, the growing volume of disputes around��credit eligibility, valuation, and rate classification��calls for a more efficient adjudication / appellate process and empowered dispute resolution mechanisms.

IMS Rollout: A Bold Leap Toward Smarter Compliance

The upcoming rollout of the Invoice Management System (IMS) marks a significant step forward in enhancing GST compliance. Designed to streamline document handling and improve credit reconciliation, IMS reflects the Government’s commitment to leveraging technology for greater efficiency and transparency. As this transformative initiative unfolds, businesses, especially smaller enterprises are optimistic that the phased implementation and supportive infrastructure will ensure a smooth transition. With inclusive capacity-building efforts, IMS is set to make compliance simpler and more accessible for all.

As GST enters its ninth year, the conversation is shifting from implementation to optimisation. Stakeholders across industries are now focused on refining the system to ensure it remains agile, inclusive, and future-ready. This calls for a dual-track approach: addressing immediate operational challenges while laying the groundwork for long-term structural reforms.

Operational Enhancements: Addressing Short-Term Challenges

To sustain momentum some immediate tactical interventions being sought by industry participants include:

Clarity on IMS Implementation

With the IMS poised to unify compliance workflows, businesses seek clear guidance on its operational rollout, tax implications, and transitional support.

Appeal Mechanism for Amnesty Orders

In instances where GST amnesty orders involve partial demands, establishing a clear and structured pathway for appeals or corrections would further strengthen the system’s transparency and fairness. As GST continues to evolve, such enhancements can reinforce trust and ensure that procedural clarity supports both compliance and confidence among taxpayers.

Streamlining Multi-Agency Investigations

Enhancing coordination among various enforcement agencies is an important step toward making GST compliance more streamlined and efficient. As the system matures, aligning efforts across departments such as anti-evasion units and adjudicating authorities can help reduce duplication and ease the compliance journey for businesses. With clear guidance and harmonised processes, the Government is well-positioned to further simplify enforcement and support a more seamless experience for taxpayers.

Long term strategic reforms: Building a Future-Ready GST Ecosystem

Some other deeper reforms that can enhance the long term scope, simplicity, and consistency of the GST framework include:

Inclusion of Excluded Sectors

Key economic sectors such as electricity, liquor and petroleum remain outside the GST ambit, limiting the tax’s comprehensiveness. Their phased inclusion would enhance input credit flow and broaden the tax base.

Rate Rationalisation

A shift toward a simplified three-tier rate structure would reduce classification disputes and improve consumer transparency, while preserving revenue neutrality.

Centralised Assessments and Audits

Moving toward centralised audits and assessments could eliminate jurisdictional inconsistencies and foster uniformity in enforcement, especially for PAN-India businesses.

Conclusion: GST at Eight from Reform to Refinement

Eight years after its launch, GST has reshaped India’s Indirect Tax landscape, driving formalisation and digitalisation at scale. As the system matures, the next phase must focus on refinement, simplifying compliance, harmonising enforcement, and expanding its scope. With continued collaboration between policymakers and industry, GST is well-positioned to evolve into a dynamic platform that supports India’s economic aspirations and governance goals.

A version of this article was published by CNBC TV18.com on June 23 2025. The same can be read��

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Abhishek Jain

Partner and National Head, Indirect Tax

��㣨Leyu�� in India

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