GST & Tax Base

Before 2017, goods crossing India faced a maze of central and state taxes — excise, VAT, octroi, service tax — with trucks queuing for hours at state borders. On 1 July 2017, the Goods and Services Tax replaced them with a single tax under 'one nation, one tax'. Eight years on, gross GST collections hit a record ₹22 lakh crore in FY25, roughly double the FY21 level.

GST created a genuine single national market: state-border check-posts largely disappeared, cutting truck transit times sharply. The number of registered taxpayers more than doubled from about 60 lakh to over 1.5 crore, widening the formal tax base. E-invoicing and the GST Network's digital backbone made evasion harder and compliance simpler, especially for small firms filing quarterly.

GST replaced 17 central and state taxes (excise, VAT, service tax, octroi) with one nationwide tax, charged at each stage but credited along the chain so only the final consumer really pays. The GST Council — the Centre plus every state, voting together — sets the rates, making it India's boldest experiment in cooperative federalism, and the system runs on the GSTN network, which matches invoices digitally.

The push is simplification. The landmark GST 2.0 reform (September 2025) collapsed the old four-rate system into two main slabs — 5% and 18% — with a 40% rate for luxury and sin goods, cutting tax on hundreds of everyday items. Next come pre-filled returns and faster refunds for small businesses, bringing petroleum and electricity into GST over time, and widening the base beyond today's 1.4-crore-plus registered taxpayers.

The ongoing work is simplification — streamlining the multiple rate slabs, bringing more items like petroleum inside GST over time, and smoothing Centre-state finances.

~₹7 → ₹22 lakh crore annual GST (FY18→FY25). Registered taxpayers ~60 lakh → 1.5 crore+. Average monthly collection ~₹1.84 lakh crore. Sources: Ministry of Finance, GSTN, PIB.