India’s Goods and Services Tax (GST) regime, emerged on the Indian economic horizon like a dawn breaking over a fragmented indirect tax terrain, promising a unified law, seamless credit flows and a more transparent compliance system.
Over the last eight years, the law has evolved from a decisive legislative leap into a dynamic, ever-adapting framework—reshaped through proactive clarifications, guided by judicial precedents, and refined through the relentless advance of digitisation and technology. GST collections are a powerful testament not only
India’s Goods and Services Tax (GST) regime, emerged on the Indian economic horizon like a dawn breaking over a fragmented indirect tax terrain, promising a unified law, seamless credit flows and a more transparent compliance system.
Over the last eight years, the law has evolved from a decisive legislative leap into a dynamic, ever-adapting framework—reshaped through proactive clarifications, guided by judicial precedents, and refined through the relentless advance of digitisation and technology. GST collections are a powerful testament not only to India’s economic resilience, but to the system’s evolving efficiencies. GST collections in April 2025, yet again, hit a record high of Rs. 2.37 lakh crores.
Although technology adoption began under the previous indirect tax regime comprising VAT and Service Tax, the introduction of a one-stop-shop portal, i.e. GSTN, for all compliances and proceedings under GST has been a game-changer. Beyond streamlining tax filings and empowering authorities with data, GST has propelled businesses, into an aggressive wave of technology adoption, for the digital tomorrow. Today, the GSTN processes millions of transactions, daily, and these volumes are set to increase with optional line level B2C reporting on the anvil. As we move towards more adoption of advanced AI-powered analytics, both industry and policymakers will gain granular, actionable insights. Predictive risk modeling and real-time anomaly detection are set to become the cornerstone of a virtually boundless future in tax administration.
As India raises its position as an economic powerhouse, here are five focal areas to transcend limitations in the present laws:
- Widening the GST net: GST, eight years ago and today, leaves crucial pillars of the economy, viz. the petroleum sector and real estate sector out of its ambit. Petroleum products under the GST net would minimise the cascading impact of various levies, make upstream tax fully fungible, and potentially drive down costs for businesses. Equally transformative would be the inclusion of real estate into the GST framework. By making these modifications, India would be able to have a true-blue and comprehensive indirect tax.
- Administrative efficiencies: To ensure consistency in assessment and avoid multiplicity of proceedings on the same issue, a dedicated Large Taxpayer Framework for high-revenue taxpayers deserves to be evaluated; especially, for the services sector taxpayers with pan–India footprint. This approach will enable a sharper, risk-based approach with deeper analysis of the compliance data. It will reduce the instances arbitrary or unfounded demands, relieve businesses as also the tax department of duplicity of efforts and time, besides assist revenue authorities with a holistic view of business operations.
- Need for clarifications on specific issues: While the GST Council has commendably issued several clarifications over the years, certain issues persist. A specific sub-code completely dealing with all aspects including registration, transition provisions and credit reversal, in case of business reorganisations such as mergers, demergers, amalgamations, slump sales and succession will provide both clarity and certainty to all stakeholders.
Similarly, instructions and training of the revenue authorities in matters concerning the Insolvency and Bankruptcy Code (IBC) will prove beneficial.
- Credit the input tax credit: GST was designed to enable seamless tax credit flow across the entire value chain. However, credit related restrictions inherited from the previous regime on construction related expenses, employee-centric expenses, motor cars continue to be sunk costs, without offset for businesses. Such restrictions unduly but fiscally burden businesses.
Other areas that deserve attention of policymakers and administrators are: (a) making GST credit fungible across registrations for “distinct persons” and, introduction of the group concept to enable credit flow between “related persons” (b) a mindset shift within the administration to smoothen the refund environment and not scuttling or delaying refund claims.
- Dispute resolution: While significant strides in technology and compliance have been achieved, legal disputes on interpretational issues, remain. Multiple instances of conflicting rulings from various advance ruling benches have added to the chaos, uncertainty and have proven to be counterproductive. Prolonged delay in establishing the GST Appellate Tribunal, has flooded High Courts and burdened them. It is well acknowledged that dispute resolution should be speedy and provide certainty, however eight years on, this is yet to be realised.
This article is authored by Raneet Mahtani, partner and Sangita Prakash, associate partner, Dhruva Advisors LLP.
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