New Delhi, July 1 – As India marks the 8th anniversary of the Goods and Services Tax (GST), Prime Minister Narendra Modi took to the social media platform X (formerly Twitter) on Monday to describe the tax reform as a “landmark transformation” that has reshaped the country’s economic architecture.
In his post, PM Modi said the introduction of GST continues to be a pivotal reform, streamlining taxation and enhancing transparency across the economic spectrum. He emphasised that GST has significantly improved the Ease of Doing Business, particularly for India’s micro, small, and medium enterprises (MSMEs), which form the backbone of the country’s economy.
“GST has also served as a powerful engine for economic growth, while fostering true cooperative federalism by making states equal partners in this journey to integrate India’s market,” the Prime Minister wrote.
One Nation, One Tax
Launched on July 1, 2017, under the leadership of then-Finance Minister Arun Jaitley, the Goods and Services Tax (GST) replaced a complex web of indirect taxes, including Value Added Tax (VAT), excise duty, service tax, and numerous local levies. The reform consolidated these into a single, unified tax system applied to the supply of goods and services, thereby reducing tax cascading and compliance burdens.
The central idea behind GST was to create a common national market and simplify the taxation process by eliminating multiple overlapping tax structures that previously differed across states. It marked a structural shift from a fragmented tax regime to one that is more uniform and digitally integrated.
A Long Road to Reform
Though GST was formally implemented in 2017, the seeds of the idea were first sown back in 2000 during the Atal Bihari Vajpayee-led NDA government. A committee was formed to conceptualise a unified tax system, but political consensus and administrative complexities stalled progress for over a decade.
It wasn’t until the BJP returned to power in 2014 under Prime Minister Modi that the reform gained momentum. Intensive consultations between the Centre and states, along with careful legislative planning, led to the passage of the 122nd Constitutional Amendment Bill in 2016. The following year, after state-level ratifications and the passage of four key supporting laws, GST was rolled out nationwide.
Strengthening Federalism and the Economy
Besides simplifying tax compliance, the GST framework is often hailed as a hallmark of cooperative federalism. It established the GST Council—a unique body comprising representatives from both the Centre and the states—to determine tax rates, exemptions, and policy frameworks jointly. This shared governance model has been viewed as a step toward greater fiscal collaboration and transparency.
Since its rollout, GST collections have seen consistent growth, with monthly revenues frequently crossing the ₹1.5 lakh crore mark. The system has also promoted formalisation of the economy and increased the tax base by encouraging digital compliance and reducing the scope for evasion.
Looking Ahead
As India enters its ninth year of GST, policymakers continue to refine the system to address compliance burdens for small businesses, resolve disputes related to input tax credit, and streamline rates under the multiple tax slabs. A long-awaited move toward a simplified two-rate structure is also under discussion.
Economists and industry experts agree that while challenges remain—such as delays in refunds and compliance bottlenecks—the long-term impact of GST on India’s fiscal health and business ecosystem is indisputable.
With the Prime Minister reaffirming the government’s commitment to reform, GST is set to remain central to India’s economic strategy, serving not only as a taxation tool but also as a lever for national integration, competitiveness, and inclusive growth.
