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As GST completes 8 years since its rollout on July 1, 2017, it is lauded for integrating India’s tax system and promoting digitisation. However, experts underline the urgent need for simplification, rate rationalisation, and easing compliance burdens.

Key Terms & Concepts

Term	Explanation
GST	Goods and Services Tax – a unified indirect tax on the supply of goods and services in India.
GSTN	Goods and Services Tax Network – the digital backbone enabling GST administration.
GST Council	Constitutional body to decide GST rates, exemptions, and rules.
IGST	Integrated GST – levied on inter-state supplies and imports.
ITC	Input Tax Credit – mechanism allowing businesses to claim credit on input taxes.
GSTAT	GST Appellate Tribunal – to resolve GST-related disputes.

Key Achievements Over 8 Years

Area	Highlights
Revenue Growth	Monthly collections average ₹1.67 lakh crore in FY25, with total revenue crossing ₹1.8 lakh crore – exceeding GDP growth and indicating better compliance.
Digital Transformation	Automation via e-invoicing, e-way bills, credit matching, and return filing has streamlined compliance and reduced fraud.
Tax Base Expansion	Active GST registrations rose from 65 lakh in 2017 to over 1.51 crore by April 2025.
Ease of Doing Business	Removal of entry tax/octroi reduced logistics costs; seamless input tax credit improved competitiveness.
Export Support	₹1.18 lakh crore disbursed in IGST refunds in FY25 through automated ICEGATE processing.

About GST: A Quick Overview

Feature	Details
Constitutional Basis	Introduced via 101st Constitutional Amendment Act, 2016.
Nature	Value-added, destination-based tax on supply of goods and services.
Replaced Taxes	Excise Duty, Service Tax, VAT, CST, Luxury Tax, etc.
Tax Slabs	0%, 5%, 12%, 18%, 28% plus special rates of 0.25%, 1%, and 3%.
Structure	Dual: CGST + SGST for intra-state; IGST for inter-state/imports.
Governing Bodies	GST Council for policy; GSTN for digital infrastructure.

Current Challenges in GST Framework

Challenge	Explanation
Exclusion of Key Items	Petroleum and alcohol are still outside GST, affecting credit availability and causing cascading taxes.
GSTAT Delay	Lack of functional appellate tribunals in many states leads to judicial backlogs.
Complex Slab Structure	Multiple tax rates and special categories create confusion, disputes, and delays in refunds.
Compliance Burden	Despite digitisation, over-regulation, frequent rule changes, and litigation on minor procedural lapses persist.
Interpretational Issues	Lack of clarity on issues like intra-company transactions and intermediary services results in litigation.

Reform Measures Suggested

Reform Area	Proposed Solution
Phased Inclusion of Petroleum & Alcohol	Begin with ATF and natural gas using revenue-neutral rates; build consensus via compensation and fiscal safeguards.
Rate Rationalisation	Move toward a 3-rate system; address inverted duty structure, especially in textile and chemical sectors.
Dispute Resolution	Fully operationalise GSTAT; launch amnesty schemes for minor lapses; issue binding circulars for uniform interpretation.
Digital Integration	Connect GSTN with ICEGATE, DGFT, MCA, and RBI for auto-filled returns and real-time compliance.
Future-Proofing GST	Bring in new sectors like crypto, carbon credits, and digital services under GST framework.

In a Nutshell

Mnemonic: G-S-T: Growth, Simplification, Transparency
GST has enhanced revenue collection and tax compliance, but achieving a streamlined and inclusive tax regime requires reform in excluded sectors, simplification of slabs, and robust dispute mechanisms. A future-ready GST system is crucial for realising India’s $5 trillion economy vision.

Prelims Practice Questions

1. Which of the following items are currently outside the purview of GST?
   a) Tobacco
   b) Petroleum crude
   c) Alcohol for human consumption
   d) Electricity
   Choose the correct option:
   A. a, b and c only
   B. b and c only
   C. a and d only
   D. All of the above
2. Consider the following statements:
   1. GST is a destination-based tax.
   2. GST replaced all direct and indirect taxes in India.
   3. GST has a dual structure levied by both Centre and States.
      Which of the above is/are correct?
      A. 1 and 2 only
      B. 1 and 3 only
      C. 2 and 3 only
      D. All of the above
3. The GST Appellate Tribunal (GSTAT) is primarily intended to:
   A. Recommend GST rates
   B. Resolve disputes and appeals related to GST
   C. Monitor GST compliance at state level
   D. Manage digital infrastructure of GST

Mains Questions

1. Examine the impact of GST in promoting economic formalization and improving tax compliance in India. (GS3: Economy)
2. What are the key structural challenges faced by the current GST regime in India? Suggest reforms to address them. (GS2: Governance & Polity)

Prelims Answer Key and Explanations

Qn	Answer	Explanation
1	B	Petroleum crude and alcohol for human consumption are outside GST; tobacco is under GST; electricity is excluded but not listed in the question.
2	B	GST is a destination-based tax with a dual structure. It did not replace direct taxes like income tax.
3	B	GSTAT handles appeals and legal disputes arising under GST provisions.