Nine Years of GST: A Simpler Tax, a Fuller Till, and an Unfinished Second Act
India's Goods and Services Tax turned nine on 1 July. After last year's rate overhaul cut the number of slabs, June collections rose 13.9% to nearly ₹1.95 lakh crore. The reform that unified a fractured market is working better than its early years suggested — and still has its hardest pieces left to build.
The Indian Account desk · 2026-07-16
The Goods and Services Tax completed nine years on 1 July, having replaced on that date in 2017 a thicket of central and state levies with a single nationwide tax. It is worth pausing on what that did. Before GST, a lorry crossing state lines paid a patchwork of taxes and waited at check-posts; a manufacturer could not claim credit for taxes paid at an earlier stage across state boundaries. GST turned the country into something closer to one market. The idea was clean; the execution, in the early years, was not — too many rate slabs, a balky returns system, and businesses unsure which of five rates applied to their goods.
Nine years on, the picture has improved, and the last year did much of the improving. The reason to revisit the tax now is not the anniversary alone but the numbers arriving alongside it.
The most consequential recent change came in September 2025, when the GST Council — the joint federal-state body that sets rates — rationalised the structure. The old ladder of 0%, 5%, 12%, 18% and 28% was collapsed toward two principal slabs, 5% and 18%, with a higher 40% rate reserved for a short list of luxury and 'sin' goods. In practice most items that sat at 12% moved down to 5%, and the bulk of the 28% slab dropped to 18%. The government's own account, published through the Press Information Bureau, framed it as a 'next-generation' reform aimed at simplifying compliance and easing prices on everyday goods.
Simplifying slabs is not cosmetic. A large share of GST disputes has always been classification fights — whether a particular product is a biscuit or a confection, a 12% item or an 18% one. Fewer slabs mean fewer such arguments, and fewer arguments mean lower compliance costs for the small businesses that felt them most.
The revenue data give the reform its report card, and June's are strong. Gross GST collections in June 2026 were ₹1,94,812 crore, up 13.9% from a year earlier — the fastest year-on-year growth in 13 months, according to the monthly data. The composition is telling: domestic collections rose 6.5% while revenue from imports rose 34.6%, in line with the wider surge in the import bill. Net of refunds, revenue was ₹1,62,377 crore, up 11.2%. The system now counts roughly 1.65 crore registered taxpayers.
A rise in collections after rates were cut is the point worth dwelling on. When the tax on many goods was reduced in 2025, the natural fear was that revenue would fall. That it has instead grown suggests two things working together: lower rates encouraging more of the economy into the formal, taxed system, and consumption itself holding up. Finance Minister Nirmala Sitharaman has described GST as among the most ambitious fiscal reforms of independent India — a claim the collection trend now supports more comfortably than it once did.
What remains undone is the harder half. The GST Appellate Tribunal — the dedicated forum meant to resolve disputes without clogging the high courts — has been slow to become fully operational, leaving taxpayers with a gap in the appeals machinery. The problem of the 'inverted duty structure', where inputs are taxed at a higher rate than the finished product and refunds pile up, still traps working capital in sectors from textiles to some manufacturing. And the Council itself, which last convened in August 2025, must reconvene for the next round of decisions; a reform that depends on federal consensus stalls when the body that forges it does not meet.
The honest verdict at nine is a qualified success. GST did the thing it was built to do — it unified a fractured market and, after a rough start, is now collecting more while charging less on many goods. What it has not yet done is finish its own plumbing: a working tribunal, cleaner refunds, and a settled view on whether items still outside the net, such as petroleum, are ever brought in. The first act unified the market. The second act, still being written, is about making the machine run smoothly for the people who have to use it.