Daily Hot Topic
Topic : GST in India (7 Years and Counting)
GS-2 Mains  : IR

Background (as of June 2024):

  • GST completes 7 years, with a monthly collection of Rs 1.74 lakh crore (7.7% increase YoY).
  • Introduced in July 2017 through the 101st Amendment Act (2016).
  • Taxpayer base has grown to 1.46 crore (April 2024) from 1.05 crore (April 2018).

What is GST?

  • Unified tax system replacing multiple indirect central & state taxes.
  • Dual GST structure:
    • Central GST (CGST) levied by Central Government.
    • State GST (SGST) levied by State Governments.
  • Integrated GST (IGST) levied on interstate supplies & imports (collected by Central Govt., apportioned to destination state).

GST Council (Article 279A of Constitution):

  • Established under 101st Amendment Act (2016).
  • Chaired by Union Finance Minister.
  • Recommends to Union & States on:
    • Taxes subsumed under GST.
    • Goods & services under GST.
    • Model GST laws, levy principles, IGST apportionment.
    • Tax rates, thresholds, special provisions related to GST.
  • Dispute resolution platform between Centre, States on GST matters.
  • Voting power: 1/3 for Centre, 2/3 for States combined.

Salient Features of GST:

  • One Nation, One Tax: Uniform tax structure across India, eliminating cascading effect.
  • Destination-based Tax: Levied at each supply chain stage (manufacturer to consumer).
  • Input Tax Credit (ITC): Allows businesses to claim credit for tax paid on inputs, reducing overall tax liability and avoiding double taxation.
  • Online Compliance: GST Network (GSTN) portal for registration, return filing, tax payments, and compliance activities.
  • Anti-Profiteering Measures: National Anti-Profiteering Authority (NAA) monitors businesses to prevent unfair pricing due to GST.
  • Composition Scheme: Simplified compliance and fixed GST percentage for small taxpayers with turnover below a limit.


  • Refund Delays: Streamlining export refund processes and automating refund procedures remain concerns.
  • Adoption & Technical Issues: Small and medium businesses still struggle to adapt to the technology-driven system.
  • 15th Finance Commission Report: Highlights concerns about:
    • Multiple tax rates.
    • Shortfall in GST collections compared to forecasts.
    • High volatility in GST collections.
    • Inconsistency in return filing.
    • State dependence on central compensation.

Way Forward:

  • GST has significantly improved India’s economic landscape by streamlining indirect taxes and promoting a more transparent and efficient tax regime.
  • Despite initial challenges and ongoing adjustments, GST offers the potential for:
    • Fostering economic growth.
    • Enhancing tax compliance.
    • Creating a robust revenue system for the government.
  • As the economy grows, GST needs fine-tuning to address challenges and maximize benefits.

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