{
  "id": 12675523,
  "title": "India's GST Revolution: How India’s biggest indirect tax reform changed its economy and its way of doing business",
  "url": "https://urgent.news/2026/10/07/indias-gst-revolution-how-indias-biggest-indirect-tax-reform-changed",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-10-07T17:20:39.000Z",
  "source": {
    "name": "The Economic Times - Economy",
    "slug": "the-economic-times-economy",
    "url": "https://economictimes.indiatimes.com/news/economy/policy/india-gst-revolution-2017-2026-gst-timeline-reforms-rate-changes-impact-9-years-goods-services-tax-how-gst-changed-indian-economy/articleshow/134770669.cms"
  },
  "original_language": "en",
  "account": "Nine years since its inception, the Goods and Services Tax (GST) in India has evolved into a complex economic system, replacing a convoluted web of levies with a unified framework. The objective was not only to replace taxes but also to dismantle barriers between states, minimize tax cascades, facilitate goods movement, and integrate more economic activity within the formal system.\n\nPrior to GST, businesses encountered a bewildering array of central and state levies, such as excise duties, service tax, VAT, purchase tax, octroi, and various cesses. These taxes were streamlined under the new regime, combining 17 taxes and 23 cesses into a single system.\n\nThe transition was not without challenges. Businesses grappled with the new compliance structure, multiple tax rates, and frequent rule changes during the initial year. However, the GST Council continually adjusted rates and procedures based on industry feedback. The impact on the movement of goods across state borders was notably significant. Border commercial tax checkposts, which had slowed down trucks and contributed to bribery, were largely dismantled soon after the GST rollout, leading to smoother transportation and a reduction in turn-around times by up to 20% by 2018. The e-way bill system further bolstered this transition by shifting compliance towards electronic verification instead of physical checks.\n\nGST also tackled the issue of tax cascading, where taxes were levied over taxes already embedded in the price of goods. The input-tax-credit mechanism enabled businesses to set off taxes paid at earlier stages against subsequent liabilities. Initially, the GST framework featured four principal rates - 5%, 12%, 18%, and 28% - with essential items taxed at reduced rates, luxury and demerit goods at the highest rate, and compensation cesses applied to specific items. However, the multi-rate structure gave rise to debates and businesses faced complex returns and frequent rule modifications.\n\nIn response to these challenges, the government made several adjustments. In October 2017, the GST Council raised the threshold for the composition scheme from Rs 75 lakh to Rs 1 crore and allowed businesses with turnover up to Rs 1.5 crore to file returns quarterly. Additionally, some provisions were deferred, and rates were cut for 27 items. These changes aimed to simplify the system and ease compliance burdens.\n\nThe next major development was the introduction of e-invoicing, a critical instrument for enhancing compliance and reducing revenue leakages. This began with larger businesses in 2021, with the threshold progressively lowered. By August 2023, e-invoicing became mandatory for businesses with turnover exceeding Rs 5 crore. This digital transformation provided a clear record of transactions, bolstering the tax authority's ability to detect discrepancies and suspicious activities through data-led enforcement.\n\nThe Covid-19 pandemic underscored the importance of GST to state finances. In 2020, GST collections plummeted, exacerbating the compensation mechanism designed to protect states from revenue losses during the transition. The disagreement between the Centre and states on funding the shortfall tested the consensus-based model, but the GST Council continued its functioning through the crisis. As economic activity rebounded, GST collections recovered, exceeding Rs 1.4 lakh crore monthly by 2022. This significant improvement occurred without a broad increase in tax rates and was partly attributed to efforts to reduce leakages and improve compliance.\n\nBeyond tax collection, GST has contributed to India's broader formalization and digitization efforts. By mandating businesses to maintain documented supply chains and claim input tax credit against eligible taxes paid by suppliers, GST incentivized businesses to operate within the formal system. By FY25, gross GST collections had reached a record Rs 22.08 lakh crore, nearly double the Rs 11.37 lakh crore collected in FY21, reflecting both economic expansion and a wider formalization drive.",
  "summary": "India's GST Revolution: GST has transformed India's indirect taxation system, eliminating many previous levies to streamline compliance and taxation. Following its introduction in 2017, businesses adjusted to new frameworks and updated regulations. Key changes included the phased introduction of e-invoicing and the removal of border checkposts enhancing logistics.",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 2,
    "also_reported_by": [
      {
        "outlet": "The Economic Times - Economy",
        "title": "India's green economy can support 1.3 crore jobs by 2035 but challenges remain: Report",
        "url": "https://urgent.news/2026/10/07/indias-green-economy-can-support-1-3-crore-jobs-by-2035-but",
        "published": "2026-10-07T14:28:32.000Z"
      }
    ]
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}