GST Revenues Below Pre-GST Levels Despite Major Reforms

GST Revenues Still Trail Pre-GST Levels Despite Structural Reform

ndia rolled out the Goods and Services Tax (GST) with big promises—make taxes simpler, get more people to pay up, and bring in more money. But here’s the thing: even after all these years, GST revenue as a share of GDP still hasn’t caught up to what India used to get before GST. People are starting to wonder if the system really works as well as it was supposed to.

Sure, the government has tried to fix things.

They’ve brought in e-invoicing, tweaked tax rates, and tried to pull more businesses under the tax net. Still, GST’s share of the economy sits lower than the old combined taxes. Experts point to patchy compliance, a lot of input tax credit claims, and the formal sector not growing fast enough. Collections sometimes top ₹1.6 lakh crore in a month, but that spark, that real jump in revenue everyone hoped for, just hasn’t happened yet.

There’s another problem too.

Small businesses and service providers are still slogging through endless compliance changes and paperwork. Big companies have it easier—they get smoother credit and better logistics, which just makes the gap bigger between the organized giants and smaller, unorganized players. Industries like manufacturing, textiles, and MSMEs all say their admin costs have gone up under GST, which is ironic considering the whole point was to make life easier.

So, what’s the way forward?

Policymakers are zeroing in on a few things: get more people to pay tax, cut down on the number of tax rate slabs, and use AI to catch evaders. The idea is that if GST rules stay steady and make sense, businesses will feel safer investing and more likely to follow the rules.

Bottom line:

GST has dragged India’s tax system into the modern era, no question about that. But making it fairer and more effective—that’s the real test. If the government wants GST to work the way it should, it needs to keep things simple, use digital tools smartly, and stay flexible with policy. That’s how you unlock GST’s true potential.

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