The Goods and Services Tax (GST), launched in July 2017, represents India's landmark tax reform creating a unified national market by subsuming multiple indirect taxes under 'One Nation, One Tax'.

Indirect Taxes Subsumed under GST

Central Level Taxes

• Central Excise Duty: On manufacturing of goods across sectors
• Service Tax: On provision of services (15% rate before GST)
• Additional Customs Duty: Including CVD and SAD on imports
• Central Sales Tax: On inter-state trade transactions
• Central Surcharges and Cesses: Related to supply of goods and services

State Level Taxes

• Value Added Tax (VAT): State-level tax on sale of goods
• Entertainment Tax: Except those levied by local bodies like municipalities
• Entry Tax and Octroi: Local entry barriers and municipal taxes
• Purchase Tax: On specific goods purchases
• Luxury Tax and State Cesses: On high-end goods and services

Revenue Implications Since July 2017

Positive Revenue Impact

• Record Collections: GST revenue peaked at ₹1.87 lakh crore in April 2024, showing consistent growth from initial ₹92,283 crore in July 2017
• Improved Compliance: Digital infrastructure through GSTN platform enhanced tax compliance by 25-30%
• Broadened Tax Base: Registered taxpayers increased from 65 lakh to over 1.4 crore by 2024
• Reduced Tax Evasion: E-way bills and e-invoicing systems curbed revenue leakage significantly

Revenue Challenges

• Compensation Shortfall: States faced ₹2.35 lakh crore revenue shortfall during 2020-22, requiring central borrowing
• Rate Rationalization Impact: Multiple rate slabs (5%, 12%, 18%, 28%) created compliance complexity
• COVID-19 Disruption: FY 2020-21 saw 8% decline in GST collections due to economic slowdown

The GST regime has transformed India's indirect tax landscape, with monthly collections consistently exceeding ₹1.5 lakh crore post-2022, demonstrating the reform's revenue stabilization potential despite initial implementation challenges.