GST A Landmark Reform, Reshaped India’s Economic Landscape, says PM Narendra Modi
PM Modi further noted that GST has fostered true cooperative federalism by making states equal partners in integrating India’s market.
Prime Minister Narendra Modi underscored that eight years since its rollout on July 1, 2017, the Goods and Services Tax (GST) “stands out as a landmark reform that has reshaped India’s economic landscape.” He highlighted that by reducing compliance burdens, GST has significantly improved the Ease of Doing Business for small and medium enterprises (SMEs). The reform has also acted as...
Prime Minister Narendra Modi underscored that eight years since its rollout on July 1, 2017, the Goods and Services Tax (GST) “stands out as a landmark reform that has reshaped India’s economic landscape.” He highlighted that by reducing compliance burdens, GST has significantly improved the Ease of Doing Business for small and medium enterprises (SMEs). The reform has also acted as a powerful engine for economic growth, with gross collections hitting a record ₹22.08 lakh crore in 2024–25, reflecting a year-on-year growth of 9.4 percent. PM Modi further noted that GST has fostered true cooperative federalism by making states equal partners in integrating India’s market.
https://x.com/narendramodi/status/1939979513796206655
The GST was enacted through the One Hundred and First Amendment to the Constitution of India and came into effect on July 1, 2017, replacing a complex web of central and state indirect taxes with a unified tax system. This “One Nation, One Tax” framework subsumed levies such as excise duty, service tax, VAT and others into four primary rate slabs—5 percent, 12 percent, 18 percent, and 28 percent—along with special rates for precious metals and a compensation cess for select goods. The dual GST structure comprises Central GST (CGST) and State GST (SGST) for intrastate transactions, and Integrated GST (IGST) for inter-state trade, ensuring tax credit flows smoothly across the supply chain.
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Since GST’s introduction, the threshold exemption for small taxpayers was raised—initially from ₹20 lakh to ₹40 lakh—providing significant relief to micro and small traders. The Composition Scheme further simplified compliance, allowing eligible businesses to pay tax at a fixed turnover-based rate with minimal paperwork. SME sentiment towards GST has improved markedly, with positive perception rising from 78 percent last year to 82 percent this year, according to a recent industry survey by the Press Information Bureau.
The World Bank’s Ease of Doing Business ranking for India improved following GST implementation, driven by streamlined tax administration and reduced logistical delays at state borders. A Deloitte survey, GST@8 reported that 85 percent of C-suite executives had a positive experience with the reform, citing factors such as seamless input tax credit flow and uniform compliance procedures.
GST collections have shown robust growth over the years, with gross receipts reaching ₹22.08 lakh crore in 2024–25, up 9.4 percent year-on-year. This surge in revenue reflects both the formalisation of the economy and enhanced compliance driven by digital tools such as e-Way Bills and e-Invoicing. Active GST registrations climbed to over 1.51 crore by April 30, 2025, underscoring growing taxpayer participation.
The reform’s destination-based tax mechanism has also reduced the cascading effect of taxes, boosting competitiveness and easing the cost of goods and services for end consumers. Sector-specific exemptions and relief measures—such as reduced rates on electric vehicles and affordable housing—have further stimulated targeted growth areas.
A cornerstone of GST’s design is cooperative federalism, wherein the GST Council—comprising the Union and state finance ministers—sets rates and policies by consensus. (This model has ensured balanced revenue sharing and collaborative governance, with states receiving compensation cess payments to offset transitional losses. The Council has met 55 times to refine the system, introducing measures like the QRMP scheme for small businesses and refund formula changes to expedite claim processing.
Despite its successes, GST faces ongoing challenges. Businesses have called for rate rationalisation to simplify the existing multiple-slab structure—a demand echoed by a recent survey highlighting it as the top industry concern. PwC India has proposed a streamlined three-slab GST framework and phased inclusion of petroleum products to enhance simplicity and broaden the tax base. Continued digital upgrades and targeted policy tweaks will be essential to sustaining momentum and addressing sector-specific compliance hurdles.
As GST enters its ninth year, it has indelibly transformed India’s tax landscape—driving economic growth, simplifying compliance, and knitting together a unified national market. Prime Minister Modi’s reflections reaffirm GST’s status as a landmark reform, with its success built on cooperative federalism, digital innovation, and ongoing stakeholder engagement.
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