Next-generation GST aimed at boosting India's next phase of growth

India envisions a next-generation GST to fuel its growth trajectory, aiming to streamline indirect taxation across all enterprises. Launched in 2017, the GST was preceded by nine years of implementation and feedback from taxpayers and states. Under Prime Minister Narendra Modi's guidance, the reforms focus on lowering tax rates and simplifying compliance.

The changes took effect on September 22, 2025, with further process reforms expected before the GST Council. The ultimate goal is to provide household relief, enhance business certainty, and ensure a hassle-free experience for taxpayers.

State governments have been integral to the GST framework, sharing their perspectives and experiences with the Council. This collaboration ensures a shared national purpose while respecting each government's responsibilities. The GST has shown encouraging results since its introduction, with a 25.8% increase in taxable supplies between October 2025 and July 2026 compared to the same period the previous year. The lighter rate structure has also led to a substantial expansion in reported economic activity.

The impact is evident in the revenue figures, with gross GST collections reaching Rs 12.46 lakh crore during April-September 2026, up 11.6% from the previous year. Every month from June to September experienced double-digit growth, contributing to a nearly 15% acceleration in collections. Net collections, after refunds, also grew by 10.4% over the half-year. These figures demonstrate that household relief and enterprise growth are closely connected, as consumer purchasing power sustains demand for goods and services.

The expansion of reported taxable supplies across all sectors and major states highlights the potential for more businesses to participate in growing markets and for communities to benefit from the resulting demand, investment, and employment. Small and medium enterprises can leverage a national market to reach customers beyond their immediate areas, fostering local investment and employment opportunities.

The common GST framework supports these connections, and the administration must ensure simplified administration to maintain these benefits.

The functioning of input tax credit is crucial for businesses that rely on its effective use. The post-reform figures show an increase in the share of tax liability discharged through credits, while accumulated credit has declined relative to taxable supplies. This trend is positive for businesses that can utilize eligible credits efficiently, allowing them to manage working capital better and fulfill orders promptly.

Refunds play a significant role in the GST experience. Approximately Rs 1.8 lakh crore was refunded during April-September 2026. Providing timely refunds is an essential aspect of a well-functioning tax system, and greater predictability in this process would help enterprises plan their purchases and production more confidently. The taxpayer's experience of receiving eligible refunds is a vital indicator of administrative performance.

The states have also seen a stronger revenue position, with their aggregate SGST receipts growing by about 16% during April-September. This growth supports investment in infrastructure and public services, reinforcing one another: household relief supports demand, enterprise strengthens economic activity, and public revenues help sustain development.

However, the experience also underscores the need for continued attention to the costs imposed on smaller participants, ensuring that improvements in filing, credit, and refunds allow more resources to be devoted to running and expanding businesses.