GST at 9: The journey so far and the road ahead

Explore how GST transformed India's tax ecosystem, improved compliance, and shaped the next phase of tax reforms and growth.

Key takeaways

GST has successfully created a unified indirect tax framework, replacing a fragmented system.
Technology has been a key enabler, strengthening compliance, taxpayer services and efficiency of tax administration.
With accelerated formalization of the economy, the taxpayer base has grown from 68 lakh at the time of implementation to over 1.6 crore today.
Indian businesses have benefited from greater tax certainty, reduced tax cascading, increased transparency and a more streamlined compliance environment.
The next phase of GST reforms is expected to focus on process simplification, greater automation, ease of compliance, and reducing unnecessary disputes.
Further rationalization of the input tax credit framework, streamlining of audit processes, and continued Ease of doing Business reforms can make the GST ecosystem more efficient.

GST has evolved as a transformative reform that has unified India's indirect tax landscape through technology-driven administration, greater formalization, and cooperative federalism. As the system matures, the focus will remain on making compliance simpler, processes more automated, and the overall framework more taxpayer friendly.

Sanjay Mangal

Member (GST, Central Excise and Service Tax), Central Board of Indirect Taxes and Customs (CBIC), Government of India

Over the last nine years, GST has provided businesses with greater certainty, transparency, and a more integrated market. The next phase of reforms presents an opportunity to further simplify compliance, improve the input tax credit framework, and strengthen India's competitiveness as a preferred investment and manufacturing destination.

Bipin Sapra

Partner and Indirect Tax Policy Leader, EY India

Speakers

Sanjay Mangal
Member (GST, Central Excise and Service Tax), Central Board of Indirect Taxes and Customs (CBIC), Government of India

Bipin Sapra
Partner and Indirect Tax Policy Leader, EY India

Moderator

Deepshikha Sikarwar - Associate Editor at The Economic Times

Deepshikha Sikarwar
Associate Editor, The Economic Times

For your convenience, a full text transcript of this podcast is available on the link below:

Deepshikha Sikarwar

It has been nine years since India rolled out the Goods and Services Tax (GST) in what has been billed as the country's biggest indirect tax reform since Independence.

Hello and welcome to the EY India Insights Podcast.

I am Deepshikha Sikarwar, Associate Editor at The Economic Times.

To discuss this nine-year journey of a tax that has been called the "Good and Simple Tax" by Prime Minister Narendra Modi himself, I have with me Shri Sanjay Mangal, Member (GST, Central Excise and Service Tax), Central Board of Indirect Taxes and Customs (CBIC).

And I am joined by Mr. Bipin Sapra, Partner and Indirect Tax Policy Leader at EY India.

Thank you both for joining us.

I will first come to you, Mr. Sanjay Mangal, Member (GST, Central Excise and Service Tax), Central Board of Indirect Taxes and Customs (CBIC), Government of India. It has been nine years since GST was rolled out. We have seen a lot of changes for businesses and tax authorities alike. The tax structure itself has evolved significantly, driven by technology and policy refinements. It has also brought together the Central government and the States on one platform to decide on the tax framework.

How has this nine-year journey transformed the taxation landscape and contributed to creating a unified national market?

Sanjay Mangal

Thank you, Deepshikha.

GST's journey over the last nine years has been very significant and remarkable. I would say that the stabilization of this historic reform in the landscape of indirect taxation, in a country of such vastness and diversity, is in itself a major achievement of GST.

Its universal acceptance by all is another milestone. Initially, there were several apprehensions at the time of implementation regarding whether we would be able to sustain this taxation system in the country or whether we would also have to revert to the older taxation framework, as was the experience in some countries that implemented GST earlier such as Malaysia, which had to go back to the older system within one year of GST implementation.

However, as we have all seen, GST has been a success. It has been accepted by all. A large number of improvements are being made on a continuous basis since its implementation. The system has become increasingly user-friendly and taxpayer-friendly, and compliance processes have been streamlined substantially.

The system of cooperative federalism and consensus-based decision-making has also worked very smoothly during this period.

Overall, I would say these are some of the big achievements of GST, without going into specific issues or measures or reforms undertaken because a large number of measures have been taken by the government and the GST Council over the period.

Deepshikha Sikarwar

Mr. Mangal, if I could ask you, what do you consider the biggest success of this tax reform? Would you say it is the formalization of the Indian economy, digitization, or bringing together the Centre and the States as an example of cooperative federalism?

Sanjay Mangal

Deepshikha, I would say all of them together have led to the success of GST.

Earlier, the market was fragmented. The taxation system operated differently because taxes were implemented differently for different constituents. The Centre had its own system, the States had their own systems, and there was no unification of the market.

After GST, one major achievement is that the market has been unified. The system of taxation is now one and is applicable across both States and the Centre.

The decision-making authority is also one, which is the GST Council. It has been a significant example of cooperative federalism, where consensus-based decisions have been taken jointly by the Centre and the States over the past nine years without any issue or problem.

Further, the formalization of the economy has improved quite a lot. The number of taxpayers, which was around 68 lakh at the beginning, has now increased to more than 1.6 crore.

With this formalization, the impact is not limited to GST revenues alone. It is being felt across the economy. It is being felt by the other taxation systems, such as income tax. The benefit of formalization is being reaped by income tax also. In terms of economic growth as well, formalization is playing a major role.

I would say all these are achievements of GST.

In addition, GST has brought taxpayers onto a common technology platform, which has improved taxation administration to a large extent and contributed not only to streamlining revenue administration but also to facilitation to taxpayers.

Deepshikha Sikarwar

One key aspect of GST has been this unique structure created in the form of the GST Council.

We are now hearing from industry that similar structures could be created to take forward other reforms. How do you see this model evolving? We also saw GST 2.0 last year. How do you see it shaping the future evolution of GST?

Sanjay Mangal

Based on my experience over the last few years, I can say that the GST Council system is working very efficiently and smoothly, and continues to improve.

Initially, when GST was implemented, there were differing perspectives between the Centre and the States. There were apprehensions whether such a system, where both Staes and Centre come together on a common platform and decision being taken by a large number of people together, would succeed.

However, the experience of the past nine years has shown that the system has worked very smoothly.

The way decisions are made through the GST Council mechanism, and the way those decisions are accepted by both the Centre and the States, is there. There may be discussions and even differences of opinion within the Council, but whatever decision is ultimately taken by the GST Council is accepted and implemented by all.

Till now, there has been no instance where a decision taken by the GST Council has not been implemented by any member, whether a State or the Centre.

This itself shows the success of this system, mechanism and institution.

It also reflects the dynamism of decision-making within GST, which is largely because of this institution.

As you mentioned, there are now similar demands in other areas for such a federal structure of decision-making, and perhaps that could be considered in due course.

Deepshikha Sikarwar

Before I come to you, Mr. Sapra, one question that often comes up is around the digital backbone of GST, which has been fundamental to its success.

We have seen collections rise significantly since GST was introduced. Could you elaborate on how the technology interface has strengthened compliance and governance under GST?

Sanjay Mangal

Technology is the key enabler of GST.

It is critical both for improving compliance and streamlining tax administration, as well as for facilitating trade.

As everyone knows, all GST processes—whether related to registration, refunds, returns or even legal disputes—are available through the GST portal and are conducted digitally.

All the data of the States and the Centre exists on a common GST portal.

Not only is this helpful for taxpayers because all their information is available on the system and they can check the data, and they can avail all the services through their systems without any need for interface or needing to visit tax offices.

In that way, it is quite a remarkable change from the earlier system.

At the same time, because of the availability of such large volumes of data, the efficiency of the tax administration has improved quite a lot.

This has not only helped indirect tax administration but is also helping other administrations as systems are getting integrated and there is exchange of data, further streamlining tax administration.

Deepshikha Sikarwar

Coming to you, Mr. Sapra.

How have these nine years been for Indian businesses? What has really changed on the ground? Has it become easier, or more difficult? What is industry's view on this change that was brought about nine years ago?

Bipin Sapra

Deepshikha, we have discussed this many times, and over the last nine years things have changed dramatically in the Indian indirect tax landscape.

The industry used to deal with various indirect taxes that often resulted in cascading effects—VAT, excise duty, service tax, and a plethora of other taxes.

All of those have now been replaced by one set of tax—GST—which provides far greater certainty for businesses.

The market has been unified. Investments and investors are much more certain about the tax scenario.

Effectively, digitization of compliances has significantly reduced the interfaces that used to be an absolute necessity before digitization came into place.

That has introduced transparency and a much better working environment for industry.

Overall, industry has gained phenomenally from a level of taxation.

The overall tax rates have come down from the region of 15%-25% or 18%-25% to much below. The effective rates today could be around 10%-11%. That has effectively helped the entire industry.

Deepshikha Sikarwar

Mr. Mangal, we discussed the nine-year journey and also saw GST 2.0 and significant rate rationalization measures last year.

Going forward, what will the next phase look like? What reforms are required to make GST even more seamless, growth-oriented, and aligned with global best practices?

Sanjay Mangal

We will continue to work in the direction that we have already taken.

We will continue to make life easier for taxpayers.

Further reforms will be undertaken wherever needed to streamline processes, ease compliance requirements, and automate systems as far as possible.

Wherever legal disputes exist, we will seek to address them through suitable amendments or clarifications issued through circulars, so that unnecessary disputes do not arise.

This is the general direction we have taken, and we will continue to make the system more user-friendly, more automated, and easier to comply with.

Deepshikha Sikarwar

I am sure you have been asked this question multiple times, and industry also raises it off and on—on petroleum products.

I would not let this opportunity pass without asking your thoughts on the matter.

Sanjay Mangal

I would say that it is well known that both the Constitution and the GST law provide that the decision about the date on which implementation of GST on petroleum products will be based on the recommendations of the Council.

So far, no consensus has emerged in the Council regarding its implementation. As and when there is a consensus, a suitable decision will be taken.

I would not be able to say anything more on this issue.

Deepshikha Sikarwar

Mr. Sapra, from the industry's perspective, the government carried out multiple reforms in the GST structure last year.

Going forward, what do you think still needs to be done? What should the next phase of GST reforms look like?

Bipin Sapra

I think the industry has gained substantially from the reforms introduced so far.

Rate rationalization was an excellent step, and doing it at the cost of short-term revenue losses was a phenomenal step.

The rates have created some inefficiencies around credit accumulation and inversion of rates. These might need to be carried out.

But the industry is broadly looking at entire credit rationalization—identifying credit blockages and making the credit system more efficient. That, in turn, would reduce cost of products and bring about more efficiencies.

The audit system also might need further streamlining. Multiple audits and decentralized audits need to be brought into a mechanism where there is some centralization of audits and cost of transaction, of doing business is reduced.

Industry is also looking at the decriminalization of certain offences. GST is a constantly evolving system and all are learning as we go along. Hence, decriminalization is something we should look at.

Finally, industry looks forward to continued improvements in Ease of Doing Business. The government is easing out refunds, registrations, and other compliance-related processes. That is what the industry is looking forward to.

Deepshikha Sikarwar

With that, I would like to conclude and thank Mr. Mangal for taking the time to join us for this podcast, and thank you, Mr. Sapra, for joining us as well.

As we reflect on nine years of GST and what lies ahead, it is worth remembering that GST subsumed at least 17 major indirect taxes and around 13 cesses into a single framework.

Today, Indian consumers know exactly what tax they are paying to the government whenever they purchase a product.

The journey has been incredibly eventful. There has been significant simplification, greater ease of compliance, and increased transparency.

Of course, GST remains a work in progress as the government continues to identify ways to improve the system and as India progresses towards its aspiration of becoming a developed nation by 2030.

Mr. Mangal has already outlined many of the priorities that are likely to shape the next phase of GST in India.

So, thank you, Mr. Mangal and Mr. Sapra, for sharing your insights and joining this podcast.

And thank you very much for having me as the moderator for the EY India Insights Podcast.

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Duration

20m 0s

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About us

Top news

GST at 9: The journey so far and the road ahead

Key takeaways

Speakers

Sanjay Mangal
Member (GST, Central Excise and Service Tax), Central Board of Indirect Taxes and Customs (CBIC), Government of India

Bipin Sapra
Partner and Indirect Tax Policy Leader, EY India

Moderator

Deepshikha Sikarwar
Associate Editor, The Economic Times

Deepshikha Sikarwar

Sanjay Mangal

Deepshikha Sikarwar

Sanjay Mangal

Deepshikha Sikarwar

Sanjay Mangal

Deepshikha Sikarwar

Sanjay Mangal

Deepshikha Sikarwar

Bipin Sapra

Deepshikha Sikarwar

Sanjay Mangal

Deepshikha Sikarwar

Sanjay Mangal

Deepshikha Sikarwar

Bipin Sapra

Deepshikha Sikarwar

Insights

Highlights

Services

Spotlight

Industries

Case studies

Careers

Spotlight

About us

Top news

GST at 9: The journey so far and the road ahead

Key takeaways

Speakers

Sanjay Mangal Member (GST, Central Excise and Service Tax), Central Board of Indirect Taxes and Customs (CBIC), Government of India

Bipin Sapra Partner and Indirect Tax Policy Leader, EY India

Moderator

Deepshikha Sikarwar Associate Editor, The Economic Times

Sanjay Mangal
Member (GST, Central Excise and Service Tax), Central Board of Indirect Taxes and Customs (CBIC), Government of India

Bipin Sapra
Partner and Indirect Tax Policy Leader, EY India

Deepshikha Sikarwar
Associate Editor, The Economic Times